After the long wait and market speculation, China’s governing bodies have finally announced the list of the steel products that will no longer enjoy any tax rebates when exporting, and the new measure will be applied to any Customs declaration forms that are dated on May 1 and afterwards, the joint statement explained briefly.
The 146 products cover carbon, alloy and stainless steel products such as alloy steel powder, hot-rolled, cold-rolled, galvanized, galvalum, and coated carbon steel flats, welded pipes, and hot-rolled, pickled, cold-rolled stainless flats, tubes and pipes, bars and wire rods, steel rails, and angles. the HS codes of the affected steel items start with the four digits including 7205, 7209, 7210, 7212, 7214, 7217, 7219, 7220, 7221, 7222, 7223, 7225, 7226, 7227, 7228, 7229, 7301, 7302, 7303, 7304, 7305,7306 and 7307.
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The rebate of 13% of the VAT charged on exports of hot rolled coil, wire rod and rebar will no longer apply from May, according to a statement on the finance ministry’s website.
Cold rolled steel sheet, hot-dip galvanized sheet and narrow strip were also on the list of products that have had the rebate removed.
In a separate announcement, the ministry also cut the import duty on pig iron, crude steel and recycled steel — its term for what overseas markets call ferrous scrap — to zero from May.
The move to discourage steel exports and loosen imports of steelmaking raw materials comes at a time when China’s crude steel output in April reached the second-highest level in history, despite production cuts mandated in the steel hubs of Tangshan and Handan in Hebei province, and as prices of seaborne iron ore reached a record high.
“The measures will reduce the cost of importing, expand the import of iron and steel resources and lend downward pressure to domestic crude steel output, guiding the steel industry towards the reduction of overall energy consumption, promoting the transformation and high-quality development of the steel industry,” the ministry said.
China’s crude steel output over April 11-20 totaled 3.045 million mt/day, an increase of about 4% from early April and 17% higher year on year, according to estimates by China Iron & Steel Association. Spot prices of seaborne 62% Fe iron ore fines reached $193.85/dmt CFR China on April 27, according to the benchmark IODEX published by S&P Global Platts.
China exported 53.67 million mt of steel products in 2020, of which HRC and wire rod accounted for some of the largest steel types. The rebate for cold rolled coil and hot-dip galvanized coil was not removed, likely because they were deemed higher value-added products, although market participants said they could be reduced in a subsequent announcement.
At the same time, China raised the export duty on high silicon steel, ferrochrome and foundry pig iron to 25%, 20% and 15% respectively, from 20%, 15% and 10%, effective May 1.
Read full articles at My Steel Global and S&P Global
