The Chinese steel mills have used boron as an additive to some of their steel products for years as a way of getting around customs or duty restrictions on certain steel products. The idea of adding boron was to turn a simple commercial product into a “special ordered” or value-added product.

Recently, the rumor mill in China is the government is going to end rebates on steel being exported with boron added in May 2011. The net result being an increase of approximately 9% - 13% which is having an impact on the Chinese export offers.

One of our sources in Asia told SMU regarding the boron export rebate cancellation, “It is being considered and yes, rumored as stated... nothing certain yet, but HRC export offers are being pulled if shipment extends into May. No buyers are signing contracts with the Export Rebates cancellations to be equally shared if implemented.”

According to Steel 101 Instructor and former Severstal metallurgist – John Eckstein, “Small amounts of Boron have minimum impact on Hot Rolled Products. The grain size is larger and the product is softer. The domestic mills produce this Boron grade on a regular basis. No big deal and certainly not a specialty product. For Cold Rolled and Coated Product, there is no value to add the Boron.

In all cases, these are not a specialty products ... this is a way that foreign producers try to avoid customs restrictions and/or duties.”

The potential impact to Chinese steel would be higher export prices and our sources the biggest impact could be felt by buyers of cold rolled and galvanized steel (hot rolled is not allowed into U.S. out of China due to dumping).