It is reported that since June 1st, the export rebate of certain varieties of hot-rolled steel, sections, coated and plated steel and other steel products was raised from zero or 5% to 9%. The rebate hike then triggered wide response amid the industry, Insiders believe the hike would bring China's export positive influence though no substantial effect in the short run.
As per report, the rebate adjustment this time was across the board supplement for that of April 1st. covering all the steel products except construction steel and those have been hiked in April. According to the statistics the products involved in the adjustment account for over 50% of accumulative steel export in the first four months of 2009.
Traders said the rebate hike will reduce the cost for exporters and uplift their price competitiveness in the global market. For instance, after the tax rebate reached 9%, Chinese HRC price will be more favorable than that in South Korea, India and Southeast Asia, and this could ease the export difficulty facing the market.
The statistics of Customs show during January to April, China exported 528,000 tons of hot-rolled coil and plate down by 2.178 million tons or 80.5% from the corresponding period of last year. At the same time, China imported 1.284 million tonnes of hot rolled coil and plate accumulatively up 603,000 tonnes or 88.5% from that of last year. Therefore, the net HR import in January to April posted at 755,000 tonnes. In the single month of April, the export of HR was 109.000 tonnes down by 86.5%YoY while that of import was 498,000 tonnes up by 164.6%YoY or 18.2%MoM. And this is the fifth consecutive month that China witnessed HR import increase.
The rebate hike also is good for the stabilization of the steel market, insiders understand. Hot-rolled coil and plate market has been in soft and witnessing fluctuations in the past several months, the price of HR almost reached the bottom level of all the steel products and is lower than that of rebar. The rebate increase will positively changed the export situation, which will help to stabilize the domestic market.
However, in the short term, the effect of the hiked rebate is hard to see. In regions such as CIS, Middle East, USA and Europe, Chinese materials still are in a weak price position, even the rebate was hiked to 9%. The current export offer of HRC is around USD 465 per tonne, which could receive USD 35.76 per tonne tax rebate, meaning the possible offer now goes at USD 429.24 per tonne. At the same time, the same materials in Middle East and CIS only are priced at USD 365 per tonne to USD 395 per tonne. Furthermore, the current weak demand from the global market also firmly presses down the export. It is said the underlying demand recovery globally will not see until the fourth quarter of this year.
Still, many said the rebate adjustment range this time was not wide enough, which constricts the effect of the adjustment to some extent. They expect the export to pick up in the third or fourth quarter this year as global demand gradually starts to recover.
Source : MySteel.net