China's iron and steel industry is expected to grow at a
relatively slower pace this year as it will take some time for it
to absorb the pressure of the price rise caused by the government's
latest move to cut tax rebates on exports of some steel
products.
The government will reduce tax rebates on exports of select
high-end steel products such as stainless plate and cold-rolled
steel sheet and completely remove the tax rebate on hot-rolled
steel sheet and section steel from April 15, announced the Ministry
of Finance on Tuesday.
"The tax rebate cut, which has been debated for a long time,
won't have a substantial impact on the market. Many steel producers
increased their exports substantially even before the tax rebate
policy was introduced," said Qi Xiangdong, deputy secretary-general
of the China Iron and Steel Association at the 2007 China Steel
Import and Export Seminar yesterday.
"Besides, the international demand for steel is increasing
rapidly," he said.
According to statistics of the General Administration of
Customs, China's steel exports stood at 5.38 million tons in March,
up 22.8 percent from last year. Exports in January and February
amounted to 8.75 million tons, up 40 percent year-on-year.
But Qi said the development of China's iron and steel industry
will be slower this year mainly because of the stricter macro
control leading to a shrinkage in fixed-assets investment in the
industry.
By the end of 2007, blast furnaces below 200 cubic meters and
converters and electric furnaces below 20 tons will not be allowed,
according to a National Development and Reform Commission
policy.
"It's impossible to maintain the usual 20-percent growth rate as
steel companies' production capacity will be weakened."
Qi and other steel experts said Chinese steel prices will remain
steady and lower than the price in the international market this
year. But steel companies' profits are expected to rise because of
the improvement in product structure and reduction of operation
costs.
Analysts said the rebate cut won't affect prices of steel stocks
as the move was widely expected.
(China Daily April 12, 2007)