China may reduce steel exports due to cancellation of tax breaks

The country has ended the refund of export duty on steel, which contains trace amounts of boron, starting January 1, according to the Chinese Ministry of Finance. As a result, export sales of steel will decline by about 20-30 percent by the end of the first quarter compared to the previous three months. Ma Kai, an analyst at China International Capital Corp., predicts that China's steel exports will decline by 25 percent.

Steel exporters in China add a certain amount of boron to the metal to get a tax rebate that sometimes goes up to 13 percent. It should be noted that not only China resorts to this method to export steel as low alloy. The Chinese economy is slowing growth this year. At the same time, economic growth in the country has been slow over the past two decades, and this has influenced the increase in steel exports from China, which affected the entire world trade.

Eurofer, the European Union's metals industry group, said it plans to ask the EU Trade Ministry to impose taxes on imports of Chinese rebar, due to the unfair pricing policy of exporters.

The Metallurgical Association of China, for its part, has already recommended that the country's central government increase the number of tax credits for high-end steel products, which include cold-rolled steel and galvanized sheets. There is also the possibility that steelmakers may start adding chromium to their steel products instead of boron in order to obtain tax credits.