Posted on 30 Apr 2021
Uncertainties loitering in the steel markets in and out of China have finally been settled when Beijing announced all the related foreign trade policies regarding ferrous products including imports and exports taxes and tax rebates with many being very much within market expectation, though stainless steel has been caught the market by surprise, market sources shared on April 29.
On April 28, China’s related governing bodies issued two notices regarding ferrous products imports and exports, effective on May 1, with one listing out 146 iron and steel products that had been removed of export tax rebates from the original 10% or 13%.
Some of the products are among China’s major steel products for exports such as hot-rolled alloy sheets (72254099) and hot-rolled alloy coils (72253000). China exported about 9 million tonnes of these two hot-rolled products in 2020, or 16.5% of China’s total, according to China’s customs statistics.
The two releases on April 28, just three days before China’s Labour Day holiday, thus, have put an end to the long-time speculation since the end of last year regarding export tax rebate cuts or removal on steel products exports such as hot-rolled coils, and the Chinese market sources, instead of worrying about the aftermath on the domestic steel prices or their steel exports pricing competitiveness, felt relaxed finally.
“As the policy is clear now, we can resume normal business orders,” a steel exporter from East China’s Jiangsu province commented, which was echoed by the other market sources too.
A Beijing-based market source commented about the timing too. “China used to release a tax policy late on December 31 and it took effect on January 1, at least this time there are at least three days of grace period, all being working days, not too bad,” he said.
“We know the chances are high, and we have had internal meetings discussing the possible impact and our change of steel trade strategy, but all had been on assumptions, now it is real and we can just do what we have agreed on, maybe starting looking for chances of importing ferrous products,” a Singapore-based source that works for a Chinese steel mill commented.
A Beijing-based steel analyst expected the export tax rebate cancellation to have little impact on both China’s steel export prices and volume in the near term, as “most of the Chinese mills, when signing export deals recently, have already factored in the possible cancellation of the rebates,” he reasoned, adding, “those who have not done so may raise the prices moderately, but this may not surge the prices in general.”
Besides, China’s steel exports, even if with a 13% increment, may still find them competitive in prices in the global market now that global demand has been recovering steadily and supply have been rather limited, Mysteel Global understood from the market, though Chinese steel mills and traders may prefer to sell domestically than abroad given that the domestic steel prices have been at their multi-year highs too.
Those not in the Chinese mainland expressed the relief or even happiness with Beijing’s final release of the steel trade tariffs. “It will benefit our steel exports in the near term as orders may come to Taiwan if China’s steel export prices increase too much with these new policies,” a market source in South Taiwan said.
Indian market sources had been in a frenzy asking about the details and products included in China’s steel exports tax rebate cancellation, partly as many products such as HRC are also among the country’s major steel exports, and it has been selling semis such as billet to China too.
China has decided to remove import taxes from 20 iron and steel products starting May 1 including pig iron, and billets, as reported.
Reaction from China’s stainless steel market
In contrast to the overall calm in China’s carbon steel community, the stainless steel market sources in and out of China expressed surprise at removing export tax rebates from a series of stainless products too including hot-rolled, and cold-rolled, longs and flats and tubes and pipes, market sources admitted.
The rebate cancellation may “see China’s stainless exports volume decrease in the near term, as the pricing competitiveness will be compromised in the global market now that the rebates are gone,” a stainless trader in South China confessed.
In the longer term, “we will redirect our attention back to the domestic stainless market,” he said, adding, though, that “the Chinese stainless steelmakers may even lower their export prices should they maintain high output and oversupply persist in the domestic market”.
A Shanghai-based market source noted that some high value-added stainless products, however, are excluded from the cancellation, so “exports of these are still encouraged, and the actual impact on China’s stainless exports remains to be seen”, he said.
Source:Mysteel Global
