Due to the cancellation of the export tax rebate in China as of August 1, chaos has prevailed in China’s CRC export market. Traders and steelmakers have preferred to suspend giving ex-China offer prices for cold rolled coil (CRC), while buyers have been trying to re-negotiate previously-signed contracts, in which they will have to bear all risks of these changes.
At present, export offers for CRC given by major Chinese mills are at $990-1,000/mt FOB for September shipment, with the average prices remaining stable compared to July 28. However, the current levels are nominal as a lack of firm offers have been seen in the market and buyers will resume new negotiations only after finalizing new conditions under the signed contracts (or even canceling them). New offers from Chinese mills could be at $1,050/mt FOB or even above, sources have said, which is almost $100/mt above the level buyers were calling workable last week.
“Market players have concerns regarding CRC exports following the cancellation of the export tax rebate, and so they are suspending giving prices and waiting for a further movement from others,” an international trader told SteelOrbis.
During the given week, domestic CRC prices in China have decreased slightly amid declining HRC futures prices. Meanwhile, demand for CRC has remained slack, resulting in the prevailing bearish sentiments among market players. It is expected that CRC prices in the Chinese domestic market will likely fluctuate within a limited range in the coming week.
Average domestic 1.0 mm cold rolled coil spot prices in China are at RMB 6,413/mt ($992/mt) ex-warehouse, moving down by RMB 30/mt ($4.6/mt) compared to July 28, according to SteelOrbis’ information.
As of August 4, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,853/mt ($905/mt), decreasing by RMB 26/mt ($4.0/mt) or 0.44 percent since July 28.
$1 = RMB 6.4655