China export rebate cut to aid steel firms

The domestic steel industry is set to benefit from the reduction in China's rebates on steel exports.

An official statement jointly released by the Chinese ministries of Finance and Commerce said export rebates onsteel products will be brought down to 8 per cent from 11 per cent with effect from September 15.

"The cut in rebates are expected to reduce exports from China. This should be advantageous to Indian steel manufacturers and exporters, which will have to face competition to a lesser extent," said M V S Sheshagiri Rao, director-finance, JSW Steel.

During January-July 2006, China exported 17 million tonne of steel. Compared with that, India has exported more than 4.5 million tonne of steel during the past two years.

Senior officials in Essar Steel and Uttam Galva Steel said the Chinese government's initiative will stabilise global steel demand and prices, and improve productivity of Indian manufacturers.

Domestic steel prices will remain stable for the time being, said industry sources.

"The industry was demanding a cut in Chinese export rebates for the last 6-7 months. It is good, finally the Chinese government has reduced the rates," said Rao.

The long-awaited readjustments of export rebates are intended to curb China's exports and reduce trade surplus especially for low tech, pollution intensive and hgh energy consuming sectors.

As per the new policy, the export rebates for coal and natural gas in China will be fully abolished.

The exports of textiles and plastic will have a rebate rate of 11 per cent compared with 13 per cent earlier. The tax rebate rates of some IT and high tech products in China has been increased to 17 per cent from the 13 per cent.