Chinese government may further reduce export tax rebate

SteelOrbis Shanghai Chinese steel market sources state that country's government may reduce the export tax rebate even further in an effort to curb exports. It seems that the export tax rebate policy announced on September 14 did not achieve the desired effect. According to the export situation of some steel mills, they still continued to export large quantities in October. The Chinese market sources add that the Central Government's purpose is to ensure a basic balance of trade through strict control of steel exports. The government measures are expected to include the gradual reduction and cancellation of the export refund or perhaps even the imposition of additional tariffs on exports. At present, the general market rumors say that the rebate rate of long products will be reduced to 0-3 percent, with the tax rebate being cancelled for rebar and common carbon wire rod. As regards flat rolled and pipes, the rebate rates are expected to be reduced to 5-8 percent and while those of common carbon hot rolled and cold rolled coils will also be reduced to a similar level. Furthermore, a new announcement regarding the export tax rebate rate may not allow the mills any buffer period to digest the changes. As for the timing of the official announcement, there are also many rumors circulating in the market. The government is expected to make its decision based on the exports situation for October and November. If exports in these two months do not show a sharp increase, then the announcement is likely to be postponed. However, if exports continue their trend of rapid growth, the government may announce the new policy immediately.