SHANGHAI Speculation is
mounting that China will cut export taxes on ferroalloys in
2013, not only to support local producers but also in response
to a ruling that the tariffs broke World Trade Organization
"In order to advance the growth
of economy and the industry, the tariffs (on some products) may
be adjusted moderately," Feng Jinping, deputy director of
Chinas department of customs at the Ministry of Finance,
said at a recent ferroalloys industry conference.
China revises customs duties on
some products on Jan. 1 each year, but Feng didnt confirm
details of the possible tax adjustment, which he said would be
A reduction in ferroalloys
export taxes would be a reversal of a policy announced five
years ago, which the government said was aimed at limiting
overexpansion of an energy-intensive industry and conserving
Weaker markets, however, have
encouraged ferroalloys producers to seek lower taxes.
The policy came under more
pressure after the WTO backed a complaint from the United
States, the European Union and Mexico that the taxes function
as an unfair subsidy to Chinas steelmakers.
"I guess most of the alloys
(that will have taxes cut) will be the products which were
claimed by the USA and Europe to be against the free-trade
principles of WTO, such as electrolytic manganese, tungsten,
molybdenum," according to Qi Biao, general manager of Erdos
Metallurgy Group Co. Ltd., one of Chinas largest
China levies a 25-percent tax on
ferrosilicon and a 20-percent tax on all other alloys.
The China Ferro-alloys
Association has reportedly discussed the export policy with the
government several times this year.
There had already been
speculation that export tariffs on electrolytic manganese and
molybdenum would be reduced or canceled next year.
International buyers are also
awaiting an announcement and have held off on purchasing.
"The export market is quiet
these days, as overseas players also are waiting for a
decision," Qi said.
Yang Lizhong, chairman of OM
Materials (Qinzhou) Co. Ltd., one of the biggest manganese ore
importers and manganese alloys producers in China, said he
expects export taxes to be cut or canceled to make China
competitive in the international market.
"The current export offers of
manganese alloys from China are at $1,550 to $1,600 (per tonne)
f.o.b., much higher than the Indian level of around $1,250. The
huge price gap leaves Chinese cargoes uncompetitive," Yang
Export tax cuts or cancellations
would also dampen incentives for smuggling activity, which the
government has been trying to clamp down on in the past
Smugglers typically buy material
without a value-added tax, then ship it from Guangxi province
over the border into Vietnam to avoid customs payments.
Although the government this
year increased customs smuggling inspections, reports of
illegal exports remain.
"The ferroalloys industry has run into difficulties in
recent years. We cant (be) completely dependent on
exports to solve the problem," Feng warned.
A version of this article was first
published by AMM sister publication Metal