China raises steel export rebates

 China  has announced a round of increases to export tax rebates effective on  goods passing through customs from 1 November. Traders tell Kallanish that the  move is not enough to make Chinese exports much more competitive but  will help exporters make deals when international prices are more in  line with China.

The  biggest change in rebates lifts the rebate on exports of goods under HS  codes 721030, 721041 and 721049 from 13% to 16%, meaning VAT will in  effect be fully refunded. These are all for iron or non-alloy steel  flats over 600mm wide and covers, electrogalvanized coils and both  corrugated and non-corrugated HDG. China exported 8.84 million tonnes of  these products in 2017, down -5.53% year-on-year, Chinese customs data  show. As one of the more robust products during the downturn in Chinese  exports, there is some scope for exports to recover.

China  has also increased rebates by 1% on all goods currently receiving  rebates of 5%, 9% or 15%. The HS codes for steel products with a rebate  of 9% currently are 722530, 722591, 722592, 722599, 722620, 722691,  722692, 722699, 722710, 722720, 722790 and 722860. These cover alloy  HRC, cold rolled alloy steel narrow strip, alloy HDG, alloy steel wire  rod and bar-in-coil and further-worked straight alloy steel bars.

Of  these products, in 2017 China exported 11.92 million tonnes of flat  products, down -15.3% y-o-y. China also exported 6.25mt of long products  covered by the measure, down -42.2% y-o-y.

The  small increase in rebates means they are unlikely to be the main factor  in making Chinese steel exports more competitive. The strength of the  Chinese domestic steel market currently means that export offers are  only intermittently competitive compared to other regions. The large  volume of goods shipped under the 9% rebate, or 10% from November, means  that there is likely to be an increase in volumes at the margins.

China has also increased rebates on a number of other goods including manufactured metal goods and other commodities.