July 31, 2010
China will cancel 9% export tax rebate on hot-rolled steel beginning July 15, but keep rebates on cold-rolled steel and galvanized steel coils, which is expected to strain Taiwan`s exporters of galvanized steel.
Galvanized steel coils, a downstream product of hot-rolled steel coils, are widely used to make construction materials, computer casings, furniture, slideways, and air ducts. Currently Taiwan`s capacity of such item is three million metric tons, with Yieh Phui Enterprise Co. being Taiwan`s largest producer with annual output reaching one million metric tons. Other domestic major producers of such coils are China Steel Corporation, Sheng Yu Steel Co., Prosperity Tieh Enterprise Co., and Ornasteel Enterprise Corporation.
A market analyst says China`s keeping the 13% export tax rebate on cold-rolled steel coils and galvanized steel coils shows its promotion of downstream steel export, which will strain Taiwan`s steel firms, with smaller makers fearing of being sidelined.
Retaining such rebates will likely motivate China`s steel firms to focus on exporting cold-rolled steel coils and galvanized steel coils. An insider noted the global market is worthy of observation to see if Taiwan`s manufacturers of galvanized steel coils will be impacted by rising competition from their Chinese counterparts in August.
Taiwan currently exports half its output of galvanized steel coils yearly as only between 1.2 million and 1.5 million metric tons of the products are consumed domestically.
(by Ben Shen)
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