China abolished the export tax rebate policies that encouraged
enterprises to export billet and steel ingot in Beijing Friday.
Experts said this measure aims to restrict the export of iron ore,
whose price increases 71.5 percent from April.
As China's economy develops, China needs more and more steel.
However, China has little storage of iron ore, raw material to make
steel. So China has imported large amounts of iron ore.
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In recent years, China's steel production has been on a sharp rise
and the country has begun to rely on iron ore imports. In 2003,
China replaced Japan as the world largest iron ore importer.
Last year, the country's steel production reached 272 million
tons and imported iron ore was 208 million tons, up 40.5 percent
over the previous year. More than 50 percent of iron ore used in
China come from imports.
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Experts predict in 2005 the imports of iron ore will continue to
rise. The BaoSteel, China's largest steel company, announced
February 28 on behalf of China's steel companies to accept the
price rise on the supply contract signed by a Japanese steel
company and Brazilian iron ore supplier CVRD.
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As China relies heavily on imports, the price soar of imported iron
ore would bring heavy pressure to steel
companies.??
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According to a report released by the State Information Center, the
cost of China's whole steel industry in 2005 will increase by 20 to
30 billion yuan (US$2.4-3.6 billion), accounting for 20 to 30
percent of the industry's profits in 2004.?
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Liu Xiaobing, an analyst with the custeel.com, a network that
serves for China's 12 major steel companies, said the measure will
properly change the doings that exports low value-added steel ingot
which is made from expensive imported iron ore.
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As China exports less steel ingot, it will need less iron ore, he
said.
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He said this also shows that the government wants to encourage
industrial enterprises to adjust and change their growth pattern
from energy and resource consuming to energy-saving.
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However, he said the measure will pose a great impact on steel
ingot companies.
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According to statistics from China's General Administration of
Customs, China exported 840,000 tons of steel ingot in February, up
713 percent year-on-year.
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Liu said China will export seven million tons of steel ingot, with
tax rebates reaching 2.9 billion yuan, or 3.6 percent of the profit
of the steel industry, if the policy had not been abolished.
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He said he's afraid that after the policy was abolished, large
amounts of steel ingot will be overstocked and small and
medium-sized companies will be closed down.
(Xinhua News Agency April 2, 2005)