China may revive tax rebates to bolster the country's steel sector hit by slumping profits and record high inventories, Reuters reported, citing industry association.
The China Iron and Steel Association (CISA) has appealed to the government to restore a value-added tax rebate on some high-end steel products purchased from domestic steel mills by plants that usually rely on overseas suppliers, the report said.
The move, if implemented, may help alleviate the domestic supply glut and reduce imports, hitting regional steel producers including South Korea's POSCO and Japan's Nippon Steel.
Profits at China's steel mills plunged 96 percent in the first half from a year earlier to 2.385 billion yuan, while financing costs soared 37 percent, said Zhang Changfu, CISA's vice chairman.
Credit is not only expensive but is also hard to obtain, Zhang said. Many mills, especially the larger ones, are struggling as steel prices dive just as expensive upgrades commissioned during China's decade of booming steel demand are coming online.
Source: CCR
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