Rumors have begun to circulate that China is to reduce its remaining VAT rebates for steel products and increase the export tariffs of certain other steel products.
According to the latest rumors in the market, the Chinese government may consider removing the current five percent VAT rebate for cold rolled coils and hot dip galvanized coil, and may cancel the VAT rebate for some tube varieties. Meanwhile, the current five percent export tariff for hot rolled products may be increased to eight percent.
The government is expected to review the August steel export figures, and accordingly make a decision regarding a possible export policy change in October. China's total steel exports in July amounted to 5.93 million metric tons. It is rumored that the government will revise its export policy if the export figure exceeds six million metric tons for August.
The Chinese government has already made changes to its steel export policy on four separate occasions this year. Due to these modifications and the speculative trading resulting from them, steel exports from China have continued to remain very strong since December 2006. The current strength of the domestic steel market and the tight product availability are also partially due to the strong export performance.