China cancels export tax rebate for CRC and HDG, duty on HRC discussed

Thursday, 29 July 2021 14:15:12 (GMT+3)   |   Istanbul,  Shanghai
       

On July 29, the China’s Ministry of Finance and Tariff Commission officially announced the export tax rebate cancellation on cold rolled coils, HDG, galvalume and other coated steel sheets, tinplate, different kinds of electrical steel and seamless steel pipe, which will be effective as of August 1.

This move has been expected by market participants of CRC and HDG markets, but some of them believed that the current 13 percent export tax rebate would be reduced to 4 percent. But the government decided to make similar conditions for exports of all major export steel items, after cancelling rebates for HRC, rebar, wire rod and other items from May 1. “All major steel products have no duty rebate now,” a trader said, explaining that the trading activity was reduced in the CRC and HDG market over the past month because of the uncertainties.

The cancelation of tax rebates will support prices, which have already increased, and the export trading will be hit, sources believe, but more clarity in the China’s policy will normalize market conditions in the short to medium term, SteelOrbis has learned. According to SteelOrbis, export offers for CRC given by major Chinese mills are at $980-1,010/mt FOB for September shipment, while prices for HDG with 120 mm zinc coating are at $1,020-1,030/mt FOB. Most exporters are evaluating the situation and are not in a hurry to sign new contracts. The cancelation of 13 percent export tax rebate will result in rising expenses of Chinese CRC and HDG sellers by minimum $120-130/mt.

In addition, the new export duty for HRC from China has been actively discussed in the market this week, though no official announcement has been see yet. Market sources said that the duty from 10 percent to 25 percent could be imposed in the very near future to further stimulate lower crude steel production and emissions in China in the second half. “In such conditions trading is very challenging. Mills are trying to share risks, but traders are in a bad position,” a Chinese source said.


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