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Chinese tax changes target domestic production

Announcements from Beijing to boost imports of ferrous scrap and discourage steel exports are being seen as measures to bear down on domestic steel output and cut the growth in carbon emissions.

China’s foreign ministry website announced on 28 April a cut in the import duty on pig iron, crude steel and recycled steel (ferrous scrap) to zero from 1 May. It also said VAT rebates on exports of 146 steel products, introduced a year ago, would be removed from the same date. The list includes hot rolled coil, wire rod, rebar, cold rolled steel sheet, hot-dip galvanized sheet and narrow strip.

No rebates for duties on exported cold-rolled coil and hot-dip galvanised steel were announced although some observers are anticipating a cut from the current VAT rate of 13% to perhaps 4%. The rebate regime was put in place last year as output slowed under the Chinese Coivid-19 lockdown.

’The measures will reduce the cost of importing, expand the import of iron and steel resources and lend downward pressure to domestic crude steel output, guiding the steel industry towards the reduction of overall energy consumption, promoting the transformation and high-quality development of the steel industry,’ the ministry said.

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