Interfax-China s quoted an employee with a major northern Chinese steel mill said reported that the soon to be announced value added tax rebate hike on steel product exports, if high enough will boost the international competitiveness of Chinese steelmaker.

 

An employee at Hebei Iron and Steel Group, who asked to remain anonymous said "We are expecting the government to raise VAT rebate rates on steel product exports to at least 13 percent, as a rebate rate below 13 percent would have a limited impact, especially now that prices of Chinese steel product exports are higher than those of other countries, including Russia and eastern European countries. The high prices have also impeded exports to Southeast Asian countries including Vietnam."

 

An industry insider close to the China Iron and Steel Association, who asked to remain anonymous said that China may increase VAT export rebates from 5% to 13% on cold-rolled steel products and galvanized steel products on April 1st and keep the VAT export rebates on hot-rolled steel products unchanged.

 

Mr Hu Yanping an industry analyst with Umetal said "Take hot-rolled steel coil for example. If China is to increase the VAT rebate rate on its exports to 13%, Chinese steel mills would be able to lower export prices by around USD 65 per ton. The current FOB price of Chinese cold-rolled steel coil stands at USD 500 per tonne. He said that though we don't yet know by how much China will raise VAT export rebates by, the policy will increase the competitiveness of Chinese steel products overseas. However, protectionist measures such as import tax increases will reduce the effectiveness of China's VAT rebate policies."

 

According to an industry insider based in Vietnam, the Vietnamese government decided on March 25th to raise import taxes on steel billet and construction steel products by 3 percentage points to 8% and 15% respectively, and import taxes on cold-rolled steel coil and coated steel products by 1 percentage point to 8% and 13% respectively. The higher duties will take effect April 1st.

 

The Hebei Steel Group employee said "Vietnam's small import tax hikes will not have a large impact, as Chinese exports to the country have already tumbled to a large extent. However, there is a chance that steel mills could raise their exports to Vietnam if VAT rebate rates are increased to 13% or more."

 

Mr Wei Zengmin an industry analyst with Mysteel Information said "Vietnam's import tax increase on steel products is expected to be a temporary move to protect domestic steel mills. When the global market recovers and steel consumption steps up, the country will likely cancel those tax increases.”

 

China said it will raise VAT rebates for exports of certain steel products from April 1 at an executive meeting of the State Council on March 25. Details of the VAT rebates have yet to be announced.

 

(Sourced from Interfax China)