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If China lifts the proposed steel export tax of 5 percent from December 1, the move could severely affect the steel industry in emerging Asia, especially India, warn industry insiders.
China, which is the world’s largest steel market, is mooting to drop steel export prices in a bid to boost the local steel industry which has been severely hit by the global slowdown. India, which imports about 1 million tons of steel (of its 3.6 to 4 million tons steel imports) from China alone will be drastically hit. The problem is expected to be accentuated by the already depressed demand and cut in steel production in India. The effect of the cut in China’s export tax is further compounded as India got rid of its steel import duties last April.
Although India has taken measures to protect their domestic steel industry by increasing import taxes and withdrawing export duties on certain iron and steel products, steel makers are still skeptical about cheaper Chinese steel.
A report by the Economic Times says – Indian steel companies say that the local steel here is unfairly placed with respect to Chinese steel as their government provides subsidy to raw materials. This lowers cost of production. When coke prices internationally were at $550 per tonne, Chinese steel manufacturers were reportedly buying coke at $300 per tonne. “This places Chinese steel manufacturers at an unfair advantage compared to us,” a steelmaker told the business daily.
