Chinese steel mills lose interest in exporting
Posted on 08 April 2021
Chinese steelmakers were not keen to chase export business last week, due to hot domestic sales and the uncertainties still hanging about whether the central government will cut steel export tax rebates, industry sources said.
“Export trading has been very slack recently. All players are waiting for a definite decision on the tax rebate cuts,” an industry source based in Beijing observed. The price disparity between the overseas and domestic markets has been widening, he acknowledged.
As of April 6, the related authorities were yet to say whether any definite decision had been made regarding the rebate adjustment, though rumours suggesting that rebates on certain products such as hot-rolled coil (HRC) might be removed have been circulating in the market.
As of April 2, average price of SS400 HRC sold to the ASEAN region was $845/tonne CFR, while on the same day, the Q235B HRC price in Shanghai was Yuan 5,520/t ($842.7/t) including the 13% VAT.
Therefore, the price disparity reached Yuan 748/t (based on CFR price*exchange rate + tariff + VAT Vs China’s domestic price), up Yuan 123/t on week, Mysteel calculated.
The price gap, even having widened, is "just able to cover the increment in costs if all the 13% rebate on hot coil is removed,” explained a Shanghai-based market source. However, the domestic mills are not willing to bear the risks, especially when the domestic market is still hot, she said.
“And because now the offers are generally on CFR basis, the shippers face the risks of further increases in freight as well,” she added.
Most Chinese steel mills have stopped offering prices while those who are offering have pushed prices higher, considering the robustness of domestic sales, according to Mysteel’s tracking.
As of April 2, the offer price of China-origin SS400 4.75mm HRC was $820/tonne FOB at Tianjin port in North China’s Tianjin municipality, higher by $60/t on week.
“It is now a seller’s market. Some (Chinese) suppliers are quoting based on 0% tax rebate,” the Beijing analyst said.
“They don’t care whether the buyers accept or not,” he said.Source : Mysteel Global