China announced June 22 that the nation intends to abolish the existing 9-13% rebates from July 15 in the 17% value-added tax (VAT) on exports of steel products such as HR coils and heavy plates.

       Subject to the abolition are the 9% VAT rebate in exports of HR coils and the 13% VAT rebate in exports of heavy plates, CR sheets/coils of less than 600mm thick. But the 13% VAT rebate is set to remain effective in exports of CR sheets/coils of 600mm thick or thicker, high-end products such as galvanized sheets, and non-GO (grain oriented) electrical sheets.

       With the revocation of the VAT rebates in exports of HR coils and heavy plates, it is likely that Chinese steelmakers will offer what they export at prices with the 17% VAT addition, leading to a considerable price increase of US$100/ton or beyond in their export deals from August shipments onward. As a result, there are forecasts that lows of steel transaction prices in Asia will come under a substantial upward revision each for such products as HR coils and heavy plates.

       As far as the Asian steel business environment goes, a phenomenon has already arisen that indicates a changing course of things. Some customers are quoted as saying that they hope to change the formula of a supply contract into a biannual settlement from a usual quarterly one.