Chinese steel producers are worried over a possible export rebate cut by the Chinese authorities amid growing export risks imposed by trade remedy measures from the United States and the European Union.

Wu Genping, the official of the General Administration of Customs, said the world's largest steel producer is pondering plans to cut export rebates for flat steel products and pipes.

Analysts said that China is mulling the move to save energy and resources since the sector is heavily energy consuming. It may also be a way to reduce the possibility of foreign nations enacting trade measures against Chinese products.

"Exports have risen too fast. If we don't do this, others will impose anti-dumping measures on us," Wu was quoted by Bloomberg as saying.

China has suffered from a series of trade remedy measures against its goods exported to other nations, especially the US and Europe, which have imposed anti-dumping or anti-subsidy tariffs on Chinese products ranging from pipes to tires. The rebate adjustment plan would add insult to injury for Chinese steel producers, analysts said.

Rebates for hot-rolled coil, which stand at 9 percent, may be eliminated, and those for cold-rolled coil and galvanized products may be cut to 9 percent from 13 percent, the 21st Century Business Herald said.

However, Qi Xiangdong, deputy secretary general of China Iron and Steel Association, denied possibility of the rebate cut, Reuters reported on Wednesday.

If the rebates being cut, "it would be a huge blow to the Chinese iron and steel industry, already hit by soaring iron ore prices," said an executive of a private steel factory located in Hebei province, who declined to be named, adding that the change might be enacted in July at the earliest.

The policy would mainly hit exports of large- and medium-sized companies that are the major producers of products subject to the rebate cut plan, said Zhao Ju, assistant general manager of Shougang's sales division. He said the move would harm the competitiveness of Chinese steel companies in Asian and European markets since it would raise the cost of exports and help producers in Japan and South Korea undercut them.

Chinese steel product exports have doubled in the first four months of the year as the global economy recovers. Export of Chinese steel products surged to 13 million tons, worth about $10 billion, in the January-April period year-on-year, according to customs data released on May 10.

China Daily

(China Daily 05/27/2010 page15)