China’s tax rebate changes are still uncertain
Chinese authorities did not announce the new steel export tax rebate policy last weekend, contrary to expectations. The latest indication is that the policy may be announced by the end of April.
The mill source said on Tuesday:”If the policy is not announced in the second half of this week, it will probably be announced at the end of April.”
Market participants are waiting anxiously, and some have even begun to wonder whether the government will announce the tax rebate changes at all. The mill source notes that although changes in the tax rebate may cause price movement, the policy is not determined according to the wishes of the market.
The determination of the central government to cut tax rebates is firm, says the source, who has been party to meetings with the China Iron and Steel Association (CISA) about the rebates.
It is thought that export rebates for HRC and rebar will be cancelled, and the export rebates for wire rod will be decreased from 13% to 9%. The mill source adds, however, that ”I would not be surprised even if all the tax rebates for these products are cancelled”.
Chinese exporters have already factored in the risk of expected export tax rebate changes into actual transactions since March. They have done this by hiking offers to cover costs, and including clauses in their contracts to specify how to share any additional cost from the removal of rebates.
Exporters also vigorously increased export shipments in March to avoid changes in the tax rebates. The latest March steel export data showed that China’s steel exports in March hit a four-year high.