The removal of a tax rebate on boron steel exports will cut Chinese shipments by as much as 30 percent, worsening oversupply in the domestic market, Custeel said.

China ended an export-tax rebate on steel alloys that contain boron as of Jan. 1, according to a Ministry of Finance statement. The nation’s overseas steel sales would fall by 20 to 30 percent in the first quarter from the previous three months because of the move, Custeel.com chief analyst Hu Yanping said. China International Capital Corp. analyst Ma Kai forecast a 25 percent decline in exports.

Chinese steel exporters have been adding boron to some of their steel products to receive the rebate, which can be as high as 13 percent when they sell overseas. A slowing Chinese economy, projected to have the slowest growth in more than two decades this year, has led to record steel exports and exacerbated global trade tensions.

Last month, European Union steel industry group Eurofer said it may ask the EU to impose tariffs on Chinese reinforcement bar because of alleged unfair pricing.

The China Iron and Steel Association has recommended the central government raise rebates on higher steel grades including cold-rolled coil, zinc-galvanized sheets and oriented silicon steel, Hu said. Meanwhile, steelmakers may add chromium into steel instead of boron to receive the rebate, she said.

Exports of boron-contained sheets, wire and rods accounted for 31 percent of China’s total steel exports in the first 11 months of 2014, according to Custeel.com. Three calls to the mobile phone of Zhang Changfu, the steel association’s general secretary, went unanswered.