China plans to scrap import taxes on ferronickel and ferrochrome containing more than 4% carbon, starting January 1, 2015, according to a notice dated December 12, on the Chinese finance ministry website.

Import taxes on both products are currently at 1%.

Market observers expect China's import of ferronickel to increase with the scrapping of the import tax.

The scrapping of the import tax on ferronickel is seen as a result of falling production of nickel pig iron -- a low-grade ferronickel -- in the country.

China's imports of ferronickel have increased by 66.6% year on year to 231,038 mt in the January-October period, according to latest data from the Chinese General Administration of Customs.

Users have turned to importing more ferronickel this year as China's nickel pig iron, or NPI, output is expected to continue declining after Indonesia banned the export of nickel ore starting January this year.

The cancellation in ferronickel import tax will also aid Chinese companies who had invested in NPI and ferronickel projects in Indonesia to export the raw material to China, sources noted.

But the scrapping of the import tax on high-carbon ferrochrome had caught most industry participants by surprise as China's own production of ferrochrome has been rising in recent years.

The government may have canceled the import taxes of both products as both are important raw materials deemed useful for the development of the Chinese stainless steel industry, said Liu Yujing, stainless steel and ferrochrome analyst.

China's import of ferrochrome containing more than 4% carbon increased by 21.6% year on year to 1.69 million mt in January-October, according to customs data.

While Chinese domestic ferrochrome production had gone up in recent years, China's imports of ferrochrome have continued to rise on expanding stainless steel production in the country, said industry watchers.

• [Editor:Juan]