• Thu
  • Dec 18, 2014
  • Updated: 1:18pm

Steelmakers expect sales boost after tariffs' removal

PUBLISHED : Friday, 14 November, 2008, 12:00am
UPDATED : Friday, 14 November, 2008, 12:00am
 

Mainland steelmakers said Beijing's scrapping of some export tariffs on the metal would boost overseas sales and prices, but some analysts said the impact could be limited by the falling demand.

As part of a 4 trillion yuan (HK$4.54 trillion) fiscal stimulus package, Beijing announced on Wednesday an increase of rebates on value-added tax on 3,770 types of exports, as well as the removal of export tariffs on selected steel products, chemicals and grain, effective from December 1.

Despite the absence of details, steelmakers and traders said yesterday steel products such as hot-rolled coils, wire products and flat products, which are subject to 5 to 10 per cent export tariffs, would be included.

Export taxes on long products, such as rebar, steel billet and pig iron, would remain intact.

'It is of course positive to the steel industry, as it could reduce our export costs,' said Su Jiangang, a general manager and executive director of Maanshan Iron & Steel.

'Together with the increase of government spending on infrastructure, we expect steel prices could pick up early next year.'

However, next year would still be challenging because of the troubled global economy, Mr Su said.

The removal of tariffs had been expected, as steel prices, demand and exports declined. Last month, the mainland exported 4.62 million tonnes steel products, down more than 2 million tonnes or 31 per cent from September.

Zhang Feng, an analyst at JP Morgan, said the measures were positive for steelmakers in the short term but rising mainland exports might put more pressure on regional and international steel prices in the next two to three months.

Domestic steel prices were lower than those in the global market, and the gap has reached about 2,000 yuan per tonne since last month.

Guotai Junan Securities analyst Sabrina Xie Lulu said exports were unlikely to surge.

'We believe the removal of export tax can't stimulate export volume substantially because of weakening external demand, although it could benefit some steelmakers, such as Angang Steel, 20 per cent of whose products are exported,' she said.

According to Ms Xie's estimates, the impact of this measure on earnings of the three Hong Kong-listed mainland steelmakers - Angang, Maanshan Iron & Steel and Chongqing Iron & Steel - would be below 5 per cent.

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