From Jan 1, 2007, German increased 3 percent VAT for steel products, however the extra tax is too minor for the steel buyer.

Around the distribution chain, it is not viewed as a topic at all. A reason that the tax increasing kept unnoticed is that the VAT is handed down to different processors to handle who are closer to the customers.

Some participants said that the topic of VAT was discussed over between the industry and their customers 9 months ago. Big company has no problem transferring the tax increase, but smaller companies are still struggling to negotiate.

Steel price hikes 30 percent and zinc price hikes of 100 percent has caused the industry material cost significantly up, the VAT increase surely will add some extra pressure on already tight margins. But in proportion, it is not a thing to see anyway.