China to cancel more steel export rebates

Release Time : 2021-08-11  View Count :

China will cancel more value-added tax rebates for some steel exports beginning Sunday August 1, the country's Ministry of Finance said on July 29.

Among them are rebates for flat steel products classified under Harmonized System codes 7209, 7210, 7225, 7226, 7302 and 7304, including cold-rolled coil and hot-dipped galvanized coil.

The removal of the rebates is meant to “promote the transformation, upgrading and high-quality development of the steel industry,” the ministry said.

Uncertainties over tax changes had caused flat-rolled steel export trading activity to thin over the past couple of months, with both steelmakers and traders hesitating to enter into trading positions or sales contracts in the event of changes.

Fears over the removal of the tax rebates for exports of Chinese CRC and HDG have kept the market muted in recent weeks, with overseas buyers deciding to wait things out.

Most trading companies stopped issuing offers in mid-July because their profit margins were not enough to offset the potential loss from the removal of the rebate for the 13% VAT, sources said.

Some trading houses and mills even rushed to move their cargoes to bonded zones to avoid these possible losses.

“It’s very difficult to conclude any transactions for flat steel because of the uncertainty over the tax changes, because buyers are very unwilling to enter into negotiations,” a trader in eastern China had told Fastmarkets last week.

Since mid-May, Fastmarkets’ weekly price assessment for steel CRC, export, fob China main port has largely stayed within a range of $870-950 per tonne.

Similarly, Fastmarkets’ weekly price assessment for steel galvanized coil, 1mm, export, fob China has stayed around $900-1,000 per tonne since then.

China last made changes to its tax rebates for steel exports on May 1, when it removed them for products such as hot-rolled coil and plate.

In addition to the removal of the VAT rebate for steel exports such as CRC and HRC on July 29, China’s finance ministry also announced an increase in export tariffs for pig iron and ferro-chrome.

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