June 22 (Bloomberg) -- China, the world’s biggest steel producer, will remove export tax rebates on some products, the first move to reduce tariffs in almost three years, amid concern rising shipments will prompt tariffs by other countries.

Rebates on hot-rolled coil, some cold-rolled coil and galvanized products will be removed, the Ministry of Finance said in a statement today on its website. Currently, there is a rebate of 9 percent for hot-rolled coil and 13 percent for cold-rolled coil. The new rates will take effect from July 15, the ministry said.

Steel-product exports by China almost doubled in the first five months of the year as a recovering global economy boosts demand from Southeast Asia and South Korea. The U.S. and European Union have filed trade complaints and slapped tariffs against China for goods ranging from pipes to tires.

“The government faces pressure to meet target to cut pollution and energy consumption as well as increasing anti- dumping measures overseas,” said Hu Yanping, an UC361 analyst “This has been widely expected.”

The State Council, China’s cabinet, asked local governments to ensure this year’s targets for cutting overcapacity and pollution are met by the third quarter, it said May 5. The nation plans to cut output of carbon dioxide per unit of gross domestic product by between 40 percent and 45 percent of 2005 levels by 2020.

Prices Fall

Reining in exports may hurt Chinese steelmakers as domestic prices fall and iron ore costs rise. Chinese steel prices have declined 11 percent from an 18-month high on April 15 amid concerns of government curbs on property loans.

Vale SA, the world’s biggest iron ore exporter, will raise contract prices for the quarter starting July 1, Jose Carlos Martins, executive director of iron ore business, has said.

China’s latest changes on steel-export rebates were made on June 1, 2009, when it raised the benefits to 9 percent on products including hot-rolled coil. The last cuts were made in July 1, 2007.

The new policy will also affect some zinc and tin products such as pipes, foils, plates and rods, the statement said.

--Xiao Yu and Helen Yuan. Editors: Richard Dobson, Ravil Shirodkar.

June 22, 2010, 6:44 PM EDT

Source: www.businessweek.com