China's steel trade tax revision to benefit the industry - CISA

China's tax revisions on steel imports and exports including cancelling export tax rebates on some products starting May 1 are strategic moves by the government after reviewing the market situation, and these are also part of the authority's policies to curtail iron ore prices from soaring, control steel capacity and reduce steel output, the China Iron & Steel Association (CISA) stated in a post on April 29.

In the context of "carbon peak and carbon neutrality", the foreign trade policy adjustments highlight the country's policy preference when the country's domestic demand grows while restrictions exist in resources and environment, and the domestic steel industry should be more eco-friendly, the association commented.

CISA used the 53.7 million tonnes of steel exports in 2020 as an example, explaining that 51 million tonnes or 95% of the total enjoyed a 13% export tax rebate, and the rebate cancellation will drop the tonnage to 13.6 million tonnes or 25% of the total, mostly being high value-added and high-technology products such as electrical steel and those for auto and home appliances manufacturing.

"Keeping the tax rebates on such products are to facilitate our high-end steel products to participate in the global competition and to provide the world with premium products that will set up a high-quality image for China's overall steel products," CISA stated.

Removing the tax rebates on the others will "guide such supplies back to the domestic market... improve the domestic market fundamentals, and this also sends a signal to the steel industry that the country will limit commercial-grade steel exports and urge the domestic steel mills to prioritize domestic market," it added.

Removing imports on elementary iron and steel products are to "help lower the import costs, and their import volumes may grow further so as to reduce the country's reliance on imported iron ore," CISA shared its interpretation on Beijing's abolishing the taxes on imports of semi-finished steel, pig iron, ferrochrome, and steel scrap.

"These policy changes will be important supplements to the supply when China cut its steel output, and will help to reduce total power consumption and carbon emission," CISA commented, projecting that China will be gradually changing from a net steel exporter to a country with balanced imports and exports and then a net steel importer.

Written by Olivia Zhang, zhangwd@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.

Photo Credit: Wall Street Journal