SOUTHERN China will continue to rely on steel imports despite Beijing's vow to slash them, a leading Hong Kong steel trader says.
Van Shung Chong Holdings executive director Andrew Yao said China's southern provinces preferred imported steel because the domestic product was more expensive and transportation links to the north were poor.
'Steel production relies heavily on coal mines. As we all know, there is no large coal mine in the south and it is much more expensive to transport steel from the north, ' he said.
The price of local steel was also more than 30 per cent higher than imported steel because of poor production efficiency and techniques, Mr Yao said.
'Many of them [local mills in the north] are still using machines imported from Russia during the 50s and, of course, the productivity is low,' Mr Yao said.
The Chinese Government has imposed a 15 per cent tariff and a 17 per cent value-added tax on imported steel in order to close the price gap.
But many infrastructure projects were exempted from the levies and factories were allowed to lift or lower the price ceiling by seven per cent, Mr Yao said.
