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Call-off of tax rebate on boron steel exports strikes China's steel makers
Jan 06, 2015
Lately, China’s call-off of tax rebate policy on exported boron steel products from 2015 has aroused wide attention. Previously, China-traded boron steel products, including hot-rolled boron steel, hot-rolled boron alloy steel, irregular hot-rolled boron alloy coil and hot-rolled boron alloy bar, enjoyed a tax rebate ratio of 9% to 13%.
During the first eleven months last year, China’s steel exports grossed 83.61 mn tonnes, an increase of 46.79% on a yearly basis, statistics from China Customs showed. Total exports of the above mentioned four varieties of boron steel products read 26.204 mn tonnes, accounting for 31.3% of the gross steel exports.
According to previous China Customs tariff regulation, exported steel products with over 0.0008% boron contained could be declared as alloy steel and thus enjoy a tax rebate ratio of 9%-13%. “The cost of adding boron to steel products is extremely low, and steel makers were able to get a tax rebate of about 300 yuan/tonne at a small cost of merely 10-20 yuan/tonne,” an industry insider said. As a result, adding boron to steel products was once a latent tactic used by steel makers to improve profitability.
However, the increase in exports of low-prices boron steel, which was triggered by tax rebate policy to some extent, also resulted in mounting anti-dumping investigations against China-traded steel products.
Some industry insiders hold that the cancellation of tax rebate will directly dampen the competitiveness of Chinese steel products. It will be a strong hit to China’s steel exports in the first quarter of 2015 and lay more pressure on domestic steel supply, and thus cause China’s steel companies to suffer in both domestic and international steel markets.
Boron wire rod and rebar exports, in particular, are likely to confront more difficulties as they cover a large proportion of boron steel exports. What’s more, construction steel exports will also be stricken in the short term. Generally, China’s overall steel exports may be pressed to plunge in the first quarter this year.
A drastic shrink in steel exports will cast a tough examine on the consumption capability of domestic market. If China’s steel makers stick to high production, the continuous declining steel market is sure to take a heavy toll. “The new policy is doubtlessly another torture to domestic steel makers,” an analyst said.
-Edited by www.Mysteel.net