China cancels tax rebates for cold-rolled coil and hot-dip galvanized steel

On Thursday, the State Administration of Taxation of the Ministry of Finance of China issued an announcement that starting August 1, 2021, export tax rebates for 23 steel products will be cancelled. The list includes galvanized color coated steel materials, tinplate, some steel rails, steel pipes used in the oil and gas industry, and the most sensitive are cold rolled coil and galvanized tax rebates.

Officials claim that the reason for this move is that the government intends to curb the enthusiasm of steel mills to make progress and expand crude steel output and force them to focus on producing high-quality products. However, a Chinese trader said: “The government does not seem to like people doing steel production in this country.” Another major trader told Metal Expert on July 29: "All our recently exported cold rolled coils are at the buyer's full risk. So we will not lose money now, but this will be a huge problem for our customers and China as a whole. "

Most Chinese steel mills and traders have suspended the provision of cold rolled coil and galvanized steel in the international market because they need time to understand the situation. Some suppliers facing the external market have increased their quotations for cold rolled coil and galvanized steel by US$50/ton and US$30/ton from last week’s levels, to US$980-1000/ton FOB and US$1010-1030/ton FOB, respectively.

However, a representative of a major state-owned trader in China told Metal Expert: “It seems that we can still export because Japan’s cold rolled coil is still about US$60/ton more expensive than China, and our galvanized steel is US$120/ton cheaper than India.” Another trader shared his opinion. “I’m not sure about all foreign markets, but South America will definitely be our big customers. They don’t have many choices.” “The United States and the European Union. They will cry hardest, because after China cancels the tax rebate, they will have to accept higher prices from countries and regions such as Taiwan and Vietnam," said the person in charge of the export department of a large Chinese steel company.