I have posted in early May that the Chinese government might adjust its "taxes to boost steel product exports to help domestic steel mills better weather the economic downturn" (go here). This has finally happened. On Monday, the Ministry of Finance announced that China will be offering a 9 percent value-added tax rebate on exports of several high-end steel products. The tax changes extend beyond steel to include more than 600 items, according to this report.
The sharp drop in the sale of steel products has reduced demand for coking coal & this has prompted BHP to slash prices by almost 60%. The company said it has already settled a “significant portion” of supply contracts with “key global customers,” according to Bloomberg. In April, the world’s largest mining company said that it expected coking coal production to be about 10 to 15 percent less than current capacity this year because of lower demand. Go here & here for more.
Based on the above, I think we should take some profit on our steel stocks since they have rallied strongly since March.
No comments:
Post a Comment