Ex-China offer prices of cold rolled coil (CRC) have moved up amid the sharply rising trend in local CRC prices, and increasing HRC futures and spot prices, while trading has been weak due to the pending tax rebate cut issue. Many Chinese exporters have been focusing on HRC exports, where demand has been pushing up realized prices very rapidly.
At present, indicative export prices for CRC from the main Chinese mills are at $880-900/mt FOB for May shipment, with the average offer prices moving up by $45/mt on average compared to March 31. The buyers should bear all risks of potential tax rebate cuts, and most steelmakers have stopped giving offer prices. “Most steelmakers stopped giving export offer prices for CRC due to the possible cancellation of the tax rebate,” an international trader told SteelOrbis.
Moreover, mills have not indicated high bid prices for CRC in the Asian region and have been more interested in offering HRC instead. As a result, the difference between the latest sales prices of re-rolling grade HRC from China and the indicative prices for CRC has been very small. Ex-China SAE1006 HRC have been sold at $900/mt CFR to Vietnam lately, which corresponds to $870/mt FOB, and even higher prices have been discussed. Some Chinese mills have even voiced offers at above $950/mt CFR to Vietnam, at $970/mt CFR in particular, but with the risks of the possible tax rebate cut on the seller.
During the given week, local CRC prices have indicated big rises in China amid increasing HRC futures prices and HRC prices. However, downstream buyers have been unwilling to accept the current high levels of prices, though inventory of CRC has been relatively low. It is thought that CRC prices will likely edge up further.
Average domestic 1.0 mm cold rolled coil spot prices in China are at RMB 6,036/mt ($925/mt) ex-warehouse, moving up by RMB 260/mt ($40/mt) compared to March 31, according to SteelOrbis’ information.
As of April 7, HRC futures at the Shanghai Futures Exchange are standing at RMB 5,527/mt ($847mt), increasing by RMB 144/mt ($22/mt) or 2.7 percent since March 31.
$1 = RMB 6.5228
