International Steel Mills

China Removes Some Boron-Added Rebates (Impact on Steel Exports to US Negligible)

January 4, 2015

The Chinese central government announced on Wednesday that it would remove the export rebate on certain boron-added steel products effective January 1, 2015. The move was anticipated by our sources in China however the impact of the move may be minimal and short-lived.

Steel Market Update received the following information from one of our steel trading sources in Asia. He explains what products are affected and how the Chinese exporters are dealing with the changes in the system:

“If I may.., China was using Alloy Square Bars as export for Billets having Boron of Min. 0.0008%. There are still rebate HS Cods in affect for Alloy Square Bars, but just not the the HS Code for Boron. Loopholes will be for Alloy Square Bars with “Cr” of min. 0.0008% which will just carry over the Boron issue. The other HS Codes Cancelled under new Policy for Boron Added Steels:

72254091 HR Sheets from COILS and Chequered Plates from COILS (Decoiled from HRC)
72269191 HR Skelp
72279010 HR Wire Rod
72283010 HR Debars and HR Square Bar

HRC, CRC, GI, Medium/Thick HR Plates etc… are not within these HS Codes and still allowed rebate with Boron added, hence there will be little affect with this announcement in the opinion of Mills… Mills are already (as we speak) checking WHICH HS Codes allow rebates on Long Products as WR, D-Bars, Square Bars as well as what can be used for Skelp and Sheets from Decoiling of HR Coils. There will be loopholes John and trust me when I say that the Chinese Customs will assist in finding those loopholes for Exporters. “IF” 40%, as Platts states and this amount is redistributed in the Domestic market, what do you think will happen?? for sure, the mills are not going to cut capacity.

Why would 0.0008% Min. “Cr” [chrome] be more costly?? It is already in the Steel, moreover, 80% of the Exports last year only listed on the Export Documentation for Customs Boron of 0.0008% Min. as nothing was ever tested, so what curtails them from doing the same with “Cr” (i.e. SAE1008Cr Wire Rods)?? If produced from EAF, it surely has 0.10-0.20% Cr in the product anyways, and if Blast Furnace, well 0.0008% is in it as well.

People are too naive when it comes to the ingenuity of Chinese to find loopholes.”

As mentioned in the quote above, flat rolled products: hot rolled coil, cold rolled coil, galvanized, plate (and Galvalume which was not mentioned) are not affected by the elimination of boron-added rebates. The Chinese do not export hot rolled to the United States due to previous dumpiing restrictions. However, cold rolled and coated steels are areas where Chinese participation in the U.S. market has been growing during 2014.