China practices an industrial policy actively supporting its domestic steel industry. Having introduced VAT export rebates promoting higher value-added products, this measure has triggered unprecedented export surges in a weak domestic steel market. China announced a removal of these rebates on 1st January 2015.
However, the recent lifting of Chinese VAT export rebates applies to a selection of the steel products concerned and only when boron is added. Reportedly, Chinese operators are looking for ways to circumvene the rebate removal by replacing boron by other alloys such as chrome.
"The boron-specific VAT removal is a welcome sign of China's awareness of concerns voiced by the global steel industry on China's steel policy and practices. But this measure is lacking commitment because it excludes the basic hot-rolled wide strip product while at the same time creating new incentives for Chinese exporters to continue enjoying the export rebate through the back door", explains EUROFER Director General, Axel Eggert. "We therefore may see a continuation of the peak exports recorded in 2014 for these alloyed products after the boron-specific rebate elimination is absorbed by the market, potentially causing higher technical steel performance risks."
European imports of Chinese boron-alloyed steel products surged in the first 10 months of 2014 year-on-year by +83% (plate) and +375% (rebar).
“Trade-distorting industrial policies by third countries are detrimental to the recovery of the European steel industry and destroy jobs in Europe”, Eggert says. “The EU must vigorously act to re-establish fair trade for European steelmakers. We strongly welcome the Commission’s awareness of the problem.”
Axel Eggert, Director General, +32 2 738 79 34 (firstname.lastname@example.org)
Karl Tachelet, Director International Affairs, +32 2 738 79 49 (email@example.com)
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