China so far has yet to adjust tariff policy on steel products and will maintain its taxation on exports of steel products next year, according to the latest official announcement for 2015 tariff adjustments released on Tuesday.

The announcement failed to meet market players’ expectations for cancellation of VAT rebates for exports of boron added steel products and removal of export tariffs on rebar (temporary export rate 15%), wire rod (temporary export rate 15%) and billet (temporary export rate 25%).
 
However, the expected cancellation of a tax rebate on boron-added steel products might be a matter of time and it will quite likely be settled next year, said Wang Zhongyuan, an analyst with SteelHome.

If Beijing authorities will announce as rumor expected to cancel VAT rebates for export of boron-added products, the impact on China’s exports of HRC, rebar, wire rod and medium plate will be sizable and a plunge in hot rolled product export after July 2010 is likely to repeat itself again.

Commenting on the rumor about the scrapping of export duties on wire rod and rebar, Wang said it would boost exports of the products, and offset the supply gas caused by the cancellation of export rebates for boron-added steel products, to some extent, if it comes true.

China’s exports of ‘other HR alloy bar’ and ‘other HR alloy steel rod’ accounted for 29.74 percent of total exports of steel products in the first ten months of the year. The possible reduced export amount of the products, if the taxation changes take place as market players expect, might be replaced by exports of common rebar and wire rod, said Wang, while adding it will take some time, of course.

The cancellation of export refund will also result in a drop in China’s HRC exports, Wang said.

Benefited from 13% VAT rebate, the four products HRC, rebar, wire rod and medium plate in China’s steel exports have been rising from 9.39 percent in 2009 to 13.85 percent in 2010, 22.98 percent in 2011, 33.55 percent in 2012, 39.81 percent in 2013 and 45.92 percent in the first ten months of the year.

The cancellation of export tax rebates for boron added products will curb China’s exports of these above mentioned products and meanwhile cause a supply shortage in global market, which may, as a result, trigger a short term bounce in global prices.