Chinese steel mills lose interest in export

Chinese steelmakers have been reluctant to pursue export business in the past week due to strong domestic sales and continued uncertainty over whether the central government will cut export tax exemptions on steel, industry sources said.

“Export trade has been very sluggish lately. All players are waiting for the final decision on the reduction of tax incentives, "- said a source in Beijing. He acknowledged that the difference in prices between foreign and domestic markets is increasing.

As of April 6, the relevant authorities have yet to say whether any specific decision has been made regarding the discount adjustment, although rumors circulated in the market that discounts on some products, such as hot rolled coil (HRC), could be canceled. ...

As of April 2, the average price of SS400 HRC sold to the ASEAN region was $ 845 per tonne CFR, while on the same day the price of HRC Q235B in Shanghai was 5,520 yuan ($ 842.7 per tonne). including 13% VAT.

Thus, the price difference reached 748 yuan per tonne (based on CFR * exchange rate + tariff + VAT compared to the domestic price of China), which is 123 yuan per tonne higher than in a week, Mysteel calculated.

The price gap, even wider, “is just able to cover the cost increase if all 13% discount on hot rolled coil is removed,” explained a market source in Shanghai. risks, especially when the domestic market is still hot, she said.

“And since offers now tend to be CFR-based, shippers also face risks of further increases in freight,” she added.

Most Chinese steel mills have stopped bidding, while bidders have raised prices given the resilience of domestic sales, according to a Mysteel tracker.

As of April 2, the bid price of the Chinese SS400 4.75mm HRC was $ 820 per tonne on FOB terms at Tianjin Port in Tianjin Municipality in northern China, up $ 60 per tonne over the week.