News about strict inspections of Chinese steel export vessels at ports have been dominating reports in China late this week as one vessel carrying HRC for the overseas market has been stopped by customs at one of the southern ports, giving a clear message to other exporters.
The customs authorities at Fangcheng port (Guangxi, China) have launched an official investigation of the vessel carrying up to 200,000 mt of steel coils, suspecting the seller not paying VAT. A number of large Chinese traders have confirmed to SteelOrbis that most of the tonnage was Chinese 2,000 mm HRC for the Vietnamese market. The investigation has already led to a delay in shipment and is expected to result in penalties.
The market has been waiting for the implementation of changes in mandatory documentation for VAT pre-payment declarations for exports from October 1. But with inspections already starting, market sources believe that trading of non-VAT steel products (mainly seen in the HRC and wire rod segments) may slow down from September.
“The export market is mixed with local exporters starting to face strict checks at some key ports and there is a rumor that a cargo was stopped for further investigation,” one Chinese trader said.
“This is big news in China at present. This cargo was destined to Vietnam mostly, but, of course, it will also affect other markets. A lot of suppliers are afraid to face delays and penalties,” another big trader commented to SteelOrbis.
Though earlier the difference in prices for VAT-included and VAT-excluded steel products was up to six percent, over the past few months it has narrowed significantly, being around $10-15/mt in most cases. “I would say that up to now non-VAT trading was still alive, but it is already less than last year. Maybe if the inspections are serious, we will finally said goodbye to this,” an international trader said.
