China will cancel more rebates of value-added tax for some steel exports from August 1, its Ministry of Finance said on Thursday 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 export trading activity for flat steel to thin in 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 of a 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 a 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 $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 Thursday July 29, China's finance ministry
also announced an increase in export tariffs for pig iron and ferro-chrome.