The government announced to cancel export tax rebates for some steel products, including cold-rolled coil and galvanized steel, which is bad news for many importers all over the world. However, the impact on Chinese suppliers may be temporary, and so far, the long-awaited export tariff has not yet been announced.
State Taxation Administration, Ministry of Finance of the People’s Republic of China on Thursday announced to cancel the export tax rebates for 23 steel products from August 1, 2021. The published list includes galvanized color-coated steel materials, tinplate, some steel rails, steel pipes for the oil and gas industry, and the most sensitive tax rebate is cold-rolled coil and galvanization. After the cancellation of export tax rebates for most other finished steels (including hot-rolled coil) in April, it is more attractive for many foreign buyers to import cold-rolled coil and galvanized steel from China, because cold-rolled coil is much cheaper than hot-rolled coil.
Officials claimed that the reason for this move was that the government intended to crack down on steel mills’ enthusiasm to further expand crude steel production and force them to focus on producing high-quality products. However, a Chinese trader said: “It seems that China does not like people who do steel business in this country.” And on July 29, another major trader said: “All our recently exported cold-rolled coils are at the buyer’s full risk, so we will not lose money now. But this will be a huge problem for our customers and the whole China.”
Most Chinese steel mills and traders have suspended the provision of cold-rolled coil and galvanized steel in the international market, because they need time to ask for information. Some suppliers facing external markets have increased their quotations of cold-rolled coil and galvanized steel by $50 and $30 per ton from last week’s prices, and to $980-$1000 FOB and $1010-$1030 FOB per ton respectively. Nevertheless, a major Chinese state trader said: “It seems that we can still export our products, because Japan’s cold-rolled coil is still about $60 per ton more expensive than China, and our galvanized steel is $120 per ton cheaper than India.” “I am not sure about all foreign markets, but South America will definitely be our big customers due to few choices,” another trader expressed his opinion. The head of the export department of a large Chinese steel company said: “The United States and the European Union will suffer the most, because they will have to accept higher prices from Taiwan, Vietnam and other countries and regions after China cancels the tax rebates.”