Influence on Steel Industry Due to Exemption of Export Tariff for Part of the St

According to the resolution of State Council, China will exempt the export tariff for 67 taxable steel products since December 1. These steel products include the hot rolled plate, hot rolled plate, large section, welded tube and part of steel wire & alloy steel, etc. Meanwhile, the export tariff should be kept for 25 taxable steel products such as thread, wire rod, rod, middle and small-sized sectional materials and non-applied steel wire.
 

The steel industry features high energy consumption, high pollution and resources-based. So, according to China's industrial development strategy and construction of the society with resources-saving and environmental protection, the export of a great quantity of steel products shall not be encouraged. Therefore, China's previous adjustments of tariff policy were all focused on improving the customs duty for steel products and restricting the excessively export of steel products. For example, the export tariff for steel products was raised by China for three times at last year, so as to control the excessively export of steel products.
 

As pointed out by Jia Junming, the economic analyst from the website of China Steel Industry, the export tariff for 67 taxable steel products was exempted, so as to help the steel enterprises tide over difficulty. Since entering the third quarter, Chinese steel enterprises' profits had declined sharply. For 71 medium and large-sized steel enterprises evaluated by Chinese Steel Association, 23 steel enterprises suffered from deficit in September. The deficit thereof reached 32.4%; RMB 1.154 billion was lost from January to September, accounting for 18.06 times of that at the same period of last year. Also, such situation was continued since October. The cancellation of export tariff for steel products could lower the export cost of steel enterprises and increase the gross amount of steel export, so as to assist the steel enterprises tide over difficulty.
 

Jia Junming pointed out that the adjustment of export tariff for steel products also followed the guideline of "both encouraging and restriction". On the one hand, the export tax rate was cancelled for part of sheet materials with high added value, large sections and part of alloy steel. Meanwhile, the previous export tariff would be still levied for 25 taxable steel products with low added value such as thread, wire rod, rod, small and medium-sized sectional materials and non-applied steel wire. So, it was obvious that the policy adjustment was focused on optimizing of the structure of steel products to be exported, so as to further guide the upgrading of structure of steel products.
 

As indicated by Jia Junming, export of certain steel products with high added value was not only good for the development of domestic economy, but enhanced China's production capacity of steel products with high added value and optimize the structure of steel industry. Exemption of export tariff for certain steel products with high added value reflected the flexibility of China's existing policy for steel industry.
 

Therefore, the adjustment of export tariff for steel products this time would relieve the pressure for price drop of domestic steel products in the short run. Since the third quarter this year, the price of domestic steel products was lowered sharply. The price for common iron was lowered by nearly 50%. Also, the reduction of export tariff for steel products should increase the export volume of steel products, so as to relieve the pressure for price drop of domestic steel products. Meanwhile, the export growth would be helpful for increasing the profits of certain steel enterprises. After the new tariff policy is launched, the export cost could be substantially cut for some medium and large-sized steel enterprises with large quantity of export volume and high added value such as An Steel and Bao Steel, which would be the major beneficiary of the policy adjustment.
 

In a long time, the duty adjustment could accelerate the upgrading of steel industry's structure. Currently, China's steel industry is deeply trapped in dilemma. The export tariff for the steel products with high added value is exempted, while the export tariff for the steel products with low added value is kept, so that the excessive production capacity of low-end steel products such as wire rod and thread steel could be phased out. Also, it could enhance the marketability of the steel makers who produce sheet materials and large sections with high added value, so as to optimize the steel product structure and accelerate the upgrading thereof in China.