Steel companies see a limited impact of the withdrawal of the export benefit granted to China

Despite the withdrawal of export benefits, there will not be a substantial reduction in steel alloy imports from China. Only a large part of imported goods continues to remain under the umbrella of discounts, say industry officials. However, a 10% decrease in imports from China is not excluded.

From January 1, China no longer benefits from tax reductions on exports for certain steel alloys, such as sheets, wires and bars that contain boron. Previously, Chinese steel with added boron enjoyed a 9-13% tax reduction. Which helped the Chinese producers to exhibit this steel in India.

„It could only be a 10-12% drop in steel imports from China due to the withdrawal of export benefits (for boron steel) because a large amount of steel imports (with boron content) such as cold-rolled coils and galvanized sheets are still under the umbrella of tax reduction,” said Jayant Acharya, director (commercial and marketing) of OD Steel.

Steel exports from China to India will be affected only until Chinese producers develop an alternative mechanism to export steel to India, said CS Verma, president of the Indian Steel Association.

„It is unlikely that the Chinese will allow the export volumes to be significantly affected. Given that domestic consumption in China is decreasing”. This was said by Verma, who is also the chairman of the State Steel Authority of India.

Discounts for steel alloy from China

Alloys that contain other elements are also not included in the discount cancellation.

“We are not sure that this (removal of tax credit) will reduce steel imports from China to India. The other options, such as the use of chrome, are still eligible for discounts. Also, the import of non-boron steel into India will continue as is. Shivram Krishnan, Chief Commercial Officer, Essar Steel, said.

Using other elements instead of boron will increase the cost of steel alloys. But, considering the tax reduction that Chinese producers enjoy, it is possible that they will absorb even this increase in input costs. In case they won’t be able to pass it on to the client, the industry officials said.

Most industry officials are of the opinion that it is important for the government to take urgent corrective measures on these imports.

Source: http://www.hellenicshippingnews.com/steel-companies-see-limited-impact-of-chinas-export-benefit-withdrawal/