Tax preferences on 78 different types of imported steel products will be abolished in China from 31 July.
From then onwards, products such as hot-rolled sheet, cold-rolled sheet, wire rod, section steel and electric steel will have an import tariff imposed in addition to VAT and consumption tax.
China is the world's fifth largest steel importer. The country imports between 15Mt to 18Mt of steel annually and half of it is used by steel processors. Once the tax preferences are abolished, imported steel destined for processing will not be exempt from 13% VAT and other categories of tax.
The tariff to be abolished was in place purely to encourage foreign trade and investment but was viewed as unfair on domestic steel producers and increasingly more so as China built up its steel production capacities to a surplus level. The China Iron and Steel Association has campaigned tirelessly for the import tariff's abolition and has finally had its wish granted.
Steel import contracts signed before 31 July and delivered by the end of the year will still benefit from the protective tariff policy in the processing trade, it is claimed.
Source: China Metals.