Domestic steel companies will no longer be handed tax rebates on exports of low-end steel billet and ingot products, the government ruled Wednesday.

The State Council's ruling seeks to further curb the expansion of the steel and iron sector and to save the environment and money.

The sector consumes vast amounts of funds and energy resources.

At its executive meeting chaired by Premier Wen Jiabao, the State Council decided it was of "urgency to halt the blind expansion in the sector's production capacity."

Analysts said the measure is a continuation of the drive to protect the environment, saving resources and energy after the government decided to cut off the tax rebate on copper, aluminium and nickel exports in the last quarter of 2004.

Currently, the rebate rate on steel billet and ingot is 13 percent.

Earlier reports indicated the gap between China's steel imports and exports narrowed last year. It imported 29.3 million tons of steel products down 7.87 million tons, or 21.2 percent, year-on-year.

However, China's steel product exports leapt by 104.6 percent or 6.06 million tons to 14.23 million tons last year from 2003. And nearly 60 percent of exports were earned by low-value-added products such as ingot.

(China Daily March 31, 2005)