Due to the strong domestic market, the export prices of Chinese origin rebars and wire rods have reached record levels. Meanwhile, the expansion of ex-CIS exports has caused Chinese exporters to lose their share in Iran, their preferred long steel export market in 2007.
China had lost many of its major long steel export markets earlier this year. The US wire rod market has been soft for most of 2007, and therefore Chinese long steel exports to this country have decreased this year. After the 10 percent export tariff came into effect in June, Chinese steel export prices reached a high level. Due to the strength of its domestic market, China's export prices also continued to increase further in the following months. As a result, Chinese steel exporters inevitably abandoned the Middle East market to the Turkish and CIS exporters. The European market is now literally experiencing an unavoidable collapse; therefore Chinese exporters are also left out of this market.
After all these developments, Chinese traders are now trying to keep at least the Southeast Asian market in their hands against the threat from CIS exports. In order to remain at acceptable levels in this market, they are keeping their offers in a range of $580-590/mt FOB. However, even exporting at this price level means a loss of profit compared with the domestic market. However, higher offers are not accepted under any circumstances.
In addition to the strong domestic demand, the continously increasing iron ore and billet prices are also forcing the rolling mills to hike their sales prices.
In the domestic market, the northeastern part of the ocuntry is seeing a slowdown in prices as it prepares for the winter; meanwhile, prices in the southern and eastern regions are continuing to increase. The demand in these regions is drawing products from the northern regions. Yet, it is understood that the demand in the southern regions in particular cannot be covered. Before the implementation of the export tariffs, the southern regions would try to cover their rebar requirements through imports from Taiwan and other nearby countries. Now, however, as the domestic Taiwan market prices are nearly 50 $/mt higher than those in the domestic Chinese market, such imports are no longer possible.