As China looks to cut production of Steel, it is ensuring adequate availability of the all-important metal within the sovereign. This it is doing so by discouraging exports. As per reports, China is considering imposing more tariffs on steel exports.
The country is looking at imposing an export duty of 10-25% on Steel products including Hot-Rolled Coil. The same is sought to be implemented in the third quarter
Since May, the country has already revoked the rebates on export taxes and raised tariffs on some products from the start of May to keep more Steel within Chinese borders. VAT refund ranging at a rate of 10-13% on around 146 Steel products was no longer available to its exporters. So the competitive pricing advantage of selling Chinese Steel in foreign markets at extremely low prices was taken away. With this proposal of increasing export duty, Chinese Steel companies will have to increase the prices of their products making them non-competitive in foreign markets. The new levies will target some products not covered by the earlier round, according to one of the people.
The country is the biggest steel exporter but now is in the midst of a decarbonizing drive. It is curbing carbon emissions by placing production limits on Steel, one of its most polluting industries. This will work to tightening the market significantly. Mills have been asked to keep production at the same level as it was in 2020. As per S&P Platts, Chinese mills will have to cut production by 58 mn tn to reach that target.
The effect of the VAT revocation was clearly visible as China’s May exports drop to 5.27 mn tn, after staying above 7 mn tn for 2 months prior. It’s production in June dropped to 93.9 mn tn from 99.5 mn tn in May. But this loss comes at the gain of the world’s Steelmakers, including India.
With India’s Production Linked incentive scheme, the country’s steel producers stand to gain big by capturing the Steel market share that China is giving up. Indian steel mills have shown agility by exporting more steel when the domestic market showed a slowdown. With China giving up the market, India stands to gain.
Source : Time Snow News
