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

China’s Ministry of Finance will remove rebates on hot-rolled coil, some old-rolled coil and galvanised products.

Currently, there is a rebate of 9% for hot-rolled coil and 13% for cold-rolled coil, and the new rates took effect from June.

Steel-product exports by China almost doubled in the first five months of the year, as a recovering global economy boosts demand from South-East Asia and South Korea.

Meanwhile, the US and the European Union are in the process of filing trade complaints and slapping tariffs against China for goods ranging from pipes to tyres.

“The government faces pressure to meet targets to reduce pollution and energy consumption, as well as increasing antidumping measures overseas,” says steel research company UC361 analyst Hu Yanping. He adds: “This has been widely expected.”

The State Council, China’s Cabinet, is asking local governments to ensure this year’s targets for cutting overcapacity and pollution are met by the third quarter. The nation plans on cutting its output of carbon dioxide for each unit of gross domestic product by between 40% and 45% of 2005 levels, by 2020.

Reining in exports is impacting negatively on Chinese steelmakers, as domestic prices are falling and iron-ore costs rising. Chinese steel prices have declined 11% from an 18-month high, on April 15, amid concerns of government curbs on property loans.

The world’s biggest iron-ore producer, Vale, is increasing contract prices for the quarter starting this month, says Vale executive director of iron-ore business Jose Carlos Martins.

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

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