CD International Enterprises Sees Chinese Government's Recent Elimination Of Magnesium Export Tax Having A Positive Impact On Sales And Gross Margins In Fiscal 2013
DEERFIELD BEACH, Fla., Jan. 9, 2013 /PRNewswire/ -- CD International Enterprises, Inc. ("CD International") (OTCQB: CDII), a U.S. based company that produces, sources, and distributes industrial commodities in China and the Americas and provides business and financial corporate consulting services, today announced it sees the Chinese government's elimination of the 10% magnesium export tax, effective January 1, 2013, having a positive impact on sales and gross margins for its Magnesium Segment in fiscal 2013.
The export tax, which has been in effect since 2008, was designed to discourage exports of magnesium and part of the government's overall effort to reduce pollution associated with certain types of industrial production. Over the past three years many producers have faced increasing pricing pressure from traders believed to be evading export taxes giving them the ability to undercut and drive down market prices of producers subject to the 10% tax. Management of CD International believes the elimination of this tax will level the playing field and make magnesium more profitable including sales through its IMG sales arm. With the automobile industry forecasting record global sales, magnesium products no longer subject to this tax will become more competitively priced with other materials leading to a potential for increased sales for the entire industry.
Commenting on the elimination of the magnesium export tax, Dr. James Wang, Chairman and CEO of CD International, stated, "We are pleased to see the government take action to help restore balance to the magnesium industry. Our company, as well as a number of other Chinese magnesium producers, believes we have faced unfair competition from unscrupulous traders who have avoided taxes and severely depressed gross margins for the whole industry. Prior to the implementation of this tax our margins were significantly higher and we believe there will be a return to a more normal export pricing environment as we no longer have to face potential unfair competition in the marketplace."
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