China will eliminate export permits for steel products that limit the volume of shipments a firm can undertake, as part of Beijing's efforts to rescue an ailing export sector, a person familiar with the plan told Dow Jones Newswires Wednesday.
The move, following the removal of export tariffs on many steel products earlier in December, signals that similar measures will be coming from the government in the months ahead, analysts said.
The new rule will be effective from Jan. 1, 2009, said the person, who declined to be named.
China introduced permits on steel exports in May 2007 to curb rising overseas sales, aiming to boost local supplies and slow the rise of the country's trade surplus.
Conditions have changed due to the global financial crisis, however, as China exported only 2.95 million metric tons of steel products in November, down 43% from the previous month and 28% from the same month of last year, according to latest data from the General Administration of Customs.
Many steel mills have cut production by 20%-40% since October due to weak demand and low prices.
"This policy move (canceling export permit) won't have a big impact on steel exports, but it shows the government's determination to boost exports and it can help to rebuild market confidence," said Zhou Xizeng, a steel analyst with Citic Securities Co.
"The government may announce more policies changes, such as cuts in export tariffs and increases in export rebates," Zhou added.
"The government may give a 5%-10% export tax rebate on some high-end steel products such as hot-rolled plate and moderate thickness plate, which don't have any rebate at the current stage," said Zhang Ping, an analyst with metals consultancy Umetal.com.
However, Beijing is unlikely to adjust export tariffs on some low-end steel products such as deformed steel bars, as it would conflict with efforts to improve the country's export structure, Zhang said.
At the midday break, shares of Baoshan Iron & Steel (600019.SH) were up 1.7% to CNY5.33, while Liuzhou Iron & Steel (601003.SH) was up 4.4% at CNY3.54.
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