* China raises tax rebate on hot-rolled steel to lift exports
* China's daily steel output steady at 1.49 mln tonnes
By Alfred Cang and Miyoung Kim
SHANGHAI/SEOUL, June 8 (Reuters) - China on Monday said it is offering a 9 percent tax rebate on exports of hot-rolled steel products, aiming to revive tumbling exports as the world's top steel producer struggles with steady output growth.
The adjustment comes as China's steel industry, already facing mounting losses, overproduction and weak domestic demand, is now in the unusual position of being a net steel importer after the global economic slowdown slashed exports by 60 percent between January and April.
But the move risks further trade friction with its trading partners over steel export tax rebates, including an anti-dumping investigation over steel pipe imports in the United States.
China scrapped export taxes on 67 steel products in late 2008 and later raised tax rebates on products including cold-rolled steel, alloy steel, stainless steel and galvanised steel, raising complaints from major trading partners such as South Korea.
Monday's move will give steel companies a 9 percent tax refund on sales of hot-rolled steel, effective from June 1, the Ministry of Finance said, cutting more than half off the value-added tax rate of 17 percent and giving producers a strong incentive to increase exports.
"The move will enhance the price competitiveness of Chinese steel in overseas markets and is likely to help restore sales to its key export markets," said a trader in South Korea, the biggest overseas market for Chinese steel.
Customs-cleared Chinese hot-rolled steel was selling at around $500 per tonne in South Korea prior to the adjustment. The adjustment would mean much cheaper prices than POSCO's ex-work product, which was offered at 680,000 won ($542), according to traders.
The China Iron and Steel Association, the industry group that monitors China's major steel mills, urged the government to adopt more generous export tax rebates after adjustments on hot-rolled steel were excluded from its previous move in April.
"I don't expect any immediate large increase in exports, as overseas markets remain weak ... but it could change the long-term picture as overseas steel prices have been rising recently," said a senior trader at a Zhejiang-based trading company. "Exports could rise if the upside momentum is maintained."
Asian steel prices have rebounded in recent months after hitting five-month lows in April, driven by expectations that government-led stimulus packages around the world will revive steel demand.
The move will also help China, the sole global major producer, to increase output in the midst of severely reduced demand across the world, easing pressure from further build-ups in steel inventories and operating losses.
China's daily crude steel production in late May reached 1.49 million tonnes, equivilent to annual output of 544 million tonnes, industry consultancy website Mysteel said on Monday, citing official statistics. [ID:nPEK63464]
The figure is well above 500 million tonnes produced last year and China's 460-million-tonne production target for this year.
Losses at 72 large and mid-sized Chinese steelmakers in the first four months of this year totalled 5.18 billion yuan ($758.2 million), compared with 63.40 billion yuan in profit last year.
($1=6.832 Yuan) ($1=1253.9 Won)
(Additional reporting by Tom Miles; Editing by Chris Lewis)