China Moves to Remove Export Tax Rebates (or is it?)

There have been a number of articles written recently regarding the move by the Chinese government to remove some of the tax incentives in the form of rebates to the Chinese steel producers who export certain steel products. Any move to remove export tax rebates on steel is seen as a positive by the rest of the world which is dealing with over-capacity issues. With China producing half of the world’s steel, all eyes are on China to make moves to reduce steel-making capacity and ultimately slow exports.

One of the main products affecting steel prices around the world (as well as scrap prices) are “billets.” Billets are produced by EAF or induction furnace steel mills in China. The billets are semi-finished steels used in the production of long products (rebar, wire, SBQ, etc.), much like a slab is used to produce flat rolled or sheet products.