New Year boost for shipping as China slashes key commodity import duties
Friday 28 December 2007
David Osler
CHINAS decision to drastically reduce import duties on key commodities including coal and oil products, as well as some consumer items, will offer a new year boost to tonne-mile demand for both wet and dry sectors, according to shipping experts.
Although this will partially be offset by sharp rises in export taxes on some steel products, coking coal and coke, the overall affect of the package is likely to prove highly positive for shipping, maritime economists said yesterday.
Details of the changes, which come into effect on January 1, were announced on Wednesday by Chinas ministry of finance.
The shift in the tax treatment of coal reflects the fact that the country has become a net coal importer this year, with surging demand combined with action against unsafe mining practices putting the dampener on domestic production.
There are good logistic reasons for bringing coal in, said Martin Stopford, London-based managing director of Clarkson Research.
There is a lot of coastal trade and what they have been doing for the past six months is cutting back on exports, while their imports have started to go up.
A chunk of the exports were going to Japan and Korea, and that has pushed Japan and Korea into the deepsea market. That is good for tonne-miles.
The reductions also take in alumina, at present taxed at 3%, and refined copper, now taxed at 2%. Copper imports from Chile a leading producer with a bilateral free trade agreement with China are already duty-free.
Tariffs are also to be cut on a range of other items, from sporting equipment to coffee machines and car gear boxes, in line with the countrys World Trade Organisation commitments.
Import tariffs on petrol, diesel and jet fuel, which range from 2% to 6%, will be set at 1%. But the export tariff on crude will remain unchanged at 5%.
The move comes after reports of domestic fuel shortages since around October, thanks to the mounting gap between the world market and capped domestic prices.
Semi-finished steel products will be taxed at 25% and stainless steel at 15% as part of a drive to restrict investment in the steel sector.
This is regarded as significant for the world steel market because China is at present responsible for about a third of world steel output.
The decision may also reflect a threat from the European Union last month to impose tariffs on Chinese steel to product domestic producers, most notably ArcelorMittal.
EU officials have already started an investigation into claims that Chinese concerns such as Baoshan Iron and Steel and Wuhan Iron and Steel have been dumping flat-rolled steel below cost.
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