SHANGHAI, Apr 29 (SMM) – The State Administration of Taxation of the Ministry of Finance of the People's Republic of China issued an announcement on April 28 that the export tax rebate for certain steel products will be cancelled from May 1, 2021.
The cancellation of the tax rebate this time involves 146 tax codes. Compared with the current export structure of steel products in China and the contents of the "List of Steel Products for Cancelling Export Tax Rebates", the major impact is mainly on plates.
Previously, the market generally expected that the export tax rate adjustment policy will be more vigorous, and all common varieties will be cancelled. In this regard, the domestic selling price export quotation method has been changed around April to two ways including increasing quotation with domestic sellers bearing the policy cost and the normal quotation with the foreign buyer bearing the policy cost.
In the short term, on the one hand, the current overseas steel trade prices have basically reflected policy risks, and the implementation of the policy has limited impact on steel mills' export trade. On the other hand, the tax rebates for cold-rolled ordinary medium-thick and wide steel strips, cold-rolled thin-wide steel strips, and electro-galvanised steel strips, hot-dip galvanized sheets, tinned sheets, and galvanised sheets have been retained. The actual policy strength is weaker than expected, which to a certain extent opens up the export space of some varieties. In addition, the current performance of overseas steel prices is still stronger than that of the domestic market. After the increase in quotations, foreign buyers continued to import Chinese steel products. It is expected that the export volume of steel mainly based on HRC will remain at a relatively high level from May to June. The impact on short-term prices is limited.
In the medium and long term, the major adjustments to import and export tariffs on steel products are mainly in line with the domestic policy of reducing crude steel production, ensuring domestic steel supply and preventing excessive increases in steel prices. If the price gap between domestic and overseas steel products is subsequently narrowed, the competitiveness of China steel exports will inevitably be much lower than before, so as to realise the backflow of exports and ensure domestic supply.
