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Featured Article - China seen unlikely to cut export tax rebates in July - 22 June 2011

China is unlikely to cut its VAT rebates on boron-added steel exports because no conclusion has been reached on whether it is necessary for Beijing to implement tougher export policies, an industry source with knowledge of the issue says. He adds that boron-added materials are no longer a target of the discussions.

 

He tells Steel Business Briefing that, after the last round of discussions earlier this year, the central government has almost decided that no more export rebate cuts will be imposed on boron-added steel. The source refuses to clarify which products are facing possible rebate cuts, but he believes it’s almost impossible to offer new cuts in the short term given the current weak export market.

 

Some market sources believe some cold rolled and coated flat product exports might be targets for the next round of rebate reductions as they still enjoy 13% tax rebates. Rebates on non-alloy hot rolled strip and plate were already removed in July 2010.

 

Rumours surrounding the rebate cuts have caused great concern among Chinese exporters as they have already received far fewer orders over the past two months due to weak demand. Market watchers expect China’s steel exports to see a major decline in June and over the next few months, a Shanghai-based trader says.

 

Export offer prices of HRC and CRC from Chinese traders have declined to around $695/tonne fob and $770/t fob, down by about $30/t and $50/t respectively from late March when overseas demand started to turn downwards. However, buying activity has still shown little sign of picking up, traders say.

 

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