China has removed Value Added Tax (VAT) rebate on the export of 146 steel products from May 1, a widely discussed move in the market since February. According to China’s finance ministry website, the rebate of 13% charged on the exports of wire rod, rebar, and hot-rolled coil will no longer be applicable from May 1. In another announcement, the ministry stated that they also cut the import duty on crude steel, recycled steel, and pig iron from May, and the term for these imports in the overseas markets is ferrous scrap. Hot-dipped galvanised sheet, narrow strip and cold rolled steel sheet was also included in the list of products with the rebate removed. Despite the production cuts mandated in the steel hubs of Handan and Tangshan in Hebei province, China's crude steel output has reached the second-highest level in history, as the prices of seaborne iron ore reached a high record. After this comes the move to discourage the imports of steel and loosen the imports of steelmaking raw materials. The ministry claimed that these measures would reduce the cost of importing and guide the steel industry towards lowering overall consumption. They also expand the import of iron and steel resources and lend downward pressure to domestic crude steel output, and promote the transformation and high-quality development of the steel industry. According to the estimates by China Iron and Steel Association, the country’s crude steel output summed up to 3.045 million metric tonnes per day over April 11-20, which is a surge of 4% from early April and 17% higher year-on-year (y-o-y). According to the benchmark iron ore index (IODEX) published by S&P Global Platts, the spot prices of seaborne 62% of iron ores reached $193.85/DMT cost and freight China on April 27. During the year 2020, China has exported 53.67 million metric tonnes of steel products, of which wire rod and hot-rolled coil (HRC) reported to be some of the largest steel types. The rebate was not removed for hot-dipped galvanised coil and cold rolled coil because they were considered higher value-added products. However, market participants suggested that they could be reduced in later announcements. China has raised the export duty on ferrochrome, foundry pig iron and high silicon steel to 20%, 15% and 25%, respectively, at the same time from 15%, 10% and 20%, effective from May 1. Image SourceAlso read: Steel prices: In a year, HRC up 40%, TMT 30%; Consumption to grow 10%