China Offers 9 Pct Export Tax Rebate On Steel Products

China is offering a 9 percent value-added tax rebate on exports of several high-end steel products, the Ministry of Finance said on Monday, in what analysts saw as the latest move to support domestic steel mills.

The country, the world's biggest steel maker, will refund the tax on flat-rolled steel products and hot-rolled ferro-alloy products effective from June 1, the ministry said in a statement on its website.

The rebate cuts more than half off the value-added tax rate of 17 percent, giving producers a strong incentive to export the products covered by the rebate.

Chinese steel mills are facing losses this year, as exports have shrunk due to weakened overseas demand and relatively high export costs, since the central government had capped rebates in the past few years to try to restrict production.

"I think many steel mills can take advantage of this. They can apply for rebates on products if minor metals were added during production," said Henry Liu, an analyst at Macquarie Bank in Shanghai.

The China Iron and Steel Association, the industry group that monitors all China's major steel mills, has urged the government to adopt more generous export tax rebates for steel products to bolster the industry.

China has already encountered friction with its trading partners over its steel export tax rebates, including an anti-dumping investigation over steel pipe imports in the United States.

The collapse in export demand cut China's shipments of steel products to the rest of the world by 60 percent in the first four months of the year and left China in an unusual position -- as a net importer of steel products -- in March and April.

Losses at 72 large and mid-sized Chinese steelmakers in the first four months of this year reached 5.18 billion yuan ($758.2 million), compared with 63.40 billion yuan in profit last year.