China faces friction over steel exports
Chinese mills upset overseas competitors by adding hardening element to product to escape higher tax through rebates for alloy metal
China has boosted exports of steel qualifying for a generous tax exemption to some Asian countries, triggering claims that mills in the world's biggest producer are taking advantage of the rebate to sell surplus steel cheaply.
The steel in question contains boron, an element that can harden steel for uses ranging from agricultural tools to mining, and receives less export tax under China's efforts to promote higher-value steel. But steelmakers in countries such as India say a minimal amount is being added to the steel to benefit from the rebate and have urged their governments to take action.
"It's yet another big loophole and people are grumbling, rightly so," said Jeremy Platt, an analyst at steel consultancy MEPS.
Chinese mills can get an export rebate that is five times greater than the cost of adding just 0.0008 per cent of boron to a tonne of steel. Adding such a tiny amount did not alter the use of the steel but classed it as a special or alloy steel that could be sold more cheaply because of the rebate, said Platt.
Sensitivity has increased as China's overall steel exports last month hit a record high. In the first half of this year, boron alloy steel exports were 11.58 million tonnes, or nearly 30 per cent of total, a government report said.
Li Xinchuang, a vice-secretary general at the China Iron and Steel Association, said Beijing was not subsidising the steel industry, but further jumps in exports risked creating problems so there was a need to find a reasonable resolution.