COMMENT: China's new ferrous tax regime to kickstart new era of steel

Issued at 2021-05-06

China's new tax regime for ferrous raw materials and steel exports will kick off a new era for the steel sector, one in which demand and supply will become more balanced and the country cuts its dependency on iron ore at a faster pace.

Chinese authorities announced last week that, from May 1, import duties for metallics and semi-finished steel would be removed and that export duties for raw materials such as ferro-silicon, ferro-chrome and high-purity pig iron would be set at 15-25%.

At the same time, Beijing also removed export tax rebates for major steel products: hot-rolled coil, rebar, wire rod, hot-rolled and cold-rolled sheet, plate, H-beam and stainless steel.

‘Definite boost’ to prices
The changes are music to the ears of steelmakers around the world, especially since they continue to power through a second quarter marked by historically high prices and marvelous profit margins for steel products.

They have been able to price in the rebate cuts even before the announcement, causing prices to increase continually in the first four months of the year. Take for example, hot-rolled coil exports from China, which have increased by 44% between January 20 and April 21.

Source: Metal Bulletin