The adjustment in tax rebate on steel exports is not likely to affect Chinese mills as the change is smaller than expected, and higher global prices will also sustain the outbound trade, analysts say.

The Chinese government will probably slash export tax rebates for most steel products to 8 to 9 percent from the current 11 percent starting next month, Xinhua news agency reported yesterday.

Premier Wen Jiabao will preside a meeting to decide on the policy adjustment tomorrow, said Jia Liangqun, an analyst with industry portal Mysteel.com.

Previous reports said the rate will be cut to 5 percent starting this month. Protests from many domestic steel mills and traders have delayed the implementation of the policy which mainly targets steel plate products used in sectors like car production.

"The policy will not cast a significant shadow over the market because mills and traders have long learnt about the adjustment and the positive thing is that the cut will be much smaller than expected," said Jia.

"I don't think the export volume will be largely affected, as traders are always happy to export if they are able to because prices on global market are always higher than those at home," Jia added.

Chen Ying, a senior economist at Jiangsu Shagang Group, China's leading private steelmaker, said the company will continue to expand its export business.

"Of course the rebate cut will increase our burden, but I believe we can well digest it by improving internal management to reduce operating costs," said Chen.

She said Shagang's exports last year totaled US$700 million but refused to estimate how much exactly the reduced rebate will affect the earnings.

The policy change is due to pressure from countries like Australia and Indonesia which have started anti-dumping probes.
 
 
Editor: Yan