Iron Oxide: Short-term pressure is still optimistic

——Effects of Adjustment of Export Tax Rebate Policy on Some Chemical Products Market (Part 3)
According to the newly implemented tax rate adjustment policy on July 1, the export tax rebate products include iron oxides and hydroxides (ie, synthetic iron oxides) in iron oxide-based products. According to industry insiders, due to the impact of this policy, exports of ferric oxide in China will decrease in the 7th, 8th, and 9th months of this year, and the domestic market will experience lower prices due to increased resources. However, in the long run, the outlook for iron oxide exports in China is still relatively optimistic.
Lin Zhihua, director of China Iron Oxide Branch of China National Coatings Industry Association, told reporters that China exported a total of 350,000 tons of iron oxide last year, accounting for about 53% of the total domestic production. After preliminary estimation, after the export tax rebate is lifted, the export cost of iron oxide will increase by 350-450 yuan per ton. Since iron oxide is a commodity with low export value added, the reduction in export tax rebate rate will result in such an increase in export costs, which will inevitably lead to a decrease in the export of iron oxide in China and an increase in domestic iron oxide market pressure. Market prices will also Declined due to increased supply of resources. At present, many production and foreign trade companies have begun to feel the "pain" brought about by this policy.
It is understood that in 2005 China's iron oxide export tax rebate rate from 17% to 13%, has brought a lot of "labor pain" to the company, but because there is a certain profit margin, most companies still survived. This time, the country cancelled the export tax rebate, coupled with the impact of rising raw material prices, the continued appreciation of the renminbi, and the implementation of the EU REACH regulations, the export cost of iron oxide has been pushed to the "critical point." In addition, the adjustment of the previous national export tax rebate policy set a transitional period, and the adjustment of the export tax rebate policy did not set up a transitional period. It just announced the contents of the adjustment policy to the public.
Lin Zhihua believes that although domestic iron oxide market prices will be affected by this policy in the last three months, in the long run, the outlook for iron oxide exports in China is still relatively optimistic, and the impact will gradually weaken. Because the production capacity of iron oxide on the international market is decreasing, the domestic production capacity is increasing. China is already a big producer of iron oxide. The four iron oxide companies with strong international power have all built factories in China, so the international market is optimistic about Chinese iron oxides. The product's dependence on iron oxide in China will not be reduced. In addition, the increase in the export costs of iron oxide in China caused by the export tax rebate policy can also be compensated by increasing the prices in the international market. At present, the price of iron oxide in the international market is about 480-550 US dollars / ton, is expected to gradually increase the price per ton of about 50 US dollars. However, the price increase of Chinese iron oxide exports must be accepted by the international market and it will take about three months. Therefore, after three months, if there are no Other variables, the domestic iron oxide market prices will gradually stabilize.
It is understood that the country’s adjustment of the export tax rebate policy for some commodities is aimed at further controlling the excessive growth of foreign trade exports, alleviating the outstanding contradictions brought about by the excessive foreign trade surplus in China, optimizing the structure of export commodities, and restraining “high energy consumption and high pollution”. The export of resource-based products will promote the transformation of foreign trade growth mode and the balance of import and export trade, reduce trade frictions, and promote the transformation of economic growth mode and sustainable economic and social development. However, if the export tax rebate adjustment fails to achieve the expected results, will the country introduce more stringent measures? This issue is worth considering for iron oxide companies. As the export momentum of China's steel industry is very strong, the country once set up “export qualification certification” and “automatic license management” systems for steel enterprises, as well as imposed export tariffs on individual steel products, even under the pressure of foreign trade friction. Steel export quotas. Therefore, China's iron oxide production enterprises must correctly face the adjustment of the national export tax rebate policy, do a good job of energy conservation, emission reduction and environmental protection, improve resource utilization, start from their own, in order to promote the technical progress of China's iron oxide industry, and improve international Competing and working hard.

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