China cancels steel export tax rebates to boost supply

Tariffs will be cancelled on imported billet, pig iron, crude steel and recycled steel raw materials and increased on exports such as high-purity pig iron, Customs Tariff Commission of the State Council, China's cabinet, said today.

Rebates will be eliminated for the 13pc value-added tax (VAT) on steel exports, including hot-rolled coil (HRC) and rebar, that were put in place a year ago to offset a slowdown from lockdowns.

"The tax adjustments are aimed at reducing import costs and expanding imports of steel resources. It will support reduced domestic crude steel production and reduce the steel industry's total energy consumption. This will promote the transformation and upgrading of the steel industry," the commission said.

The tax amendments, anticipated since February, are intended to slow growth in steel-sector carbon emissions ahead of a peak in 2025 and rein in soaring costs.

Iron ore prices rose to new 10-year highs this week, with steel production near record levels. Its largest mills raised crude steel output to a record level in mid-April after China's total output increased to its second-highest level in March. Tangshan billet is holding at 13-year highs and Argus assessments for Shanghai HRC and rebar are near their highest levels since they launched in 2016 and 2018, respectively.

Beijing will cancel rebates for the 13pc VAT on exports on more types of steel products than expected. These include HRC, hot-rolled sheet, plate, rebar, wire rod, colour-coated steel and cold-rolled sheet with 0.5-3.0mm and below 0.5mm thickness. It also cancelled rebates on round bar and section, stainless steel products with width above 600mm, seamless steel pipe, steel strips with 600-880mm thickness and galvanised corrugated sheets.