China has nullified a 13% export tax rebates on steel billet from April 1st. Insiders believe that this measure will slow down China's large volume of iron ore imports.
China has seen rapid growth of its steel and iron output in recent years, increasing import dependency on ore sharply, up to 50%.
On Mar. 28th, Nippon Steel Corporation, a Japanese steel giant, signed a supply deal with world's largest iron ore supplier, Brazil CVRD, which included a 71.5% hike in ore prices.
Baosteel Group, representative of China's steel plants to the negotiation, was forced to accept this bad news. Insiders predict that these price hikes will cost the development of China's steel industry another RMB.3 billion, and domestic iron ore will undoubtedly see great demand.
Experts believe that the significant effect of the export rebate exemption will be to alleviate the tight domestic supply of iron ore, thus restricting large-scale domestic import to some extent.
Most of this iron ore is exported to foreign countries as low-end products after a process of high energy consuming and polluting manufacture.