As anticipated, the Chinese government has cut the export tax rebate for certain steel products, in particular for hot rolled coils. Offers for spot material given from China have not yet changed but current offers are valid for loading before July 15. Meanwhile, although there have not been any transactions heard from China for new production material, offers for new production are reported to be increasing. Another opinion in the market is that, since a 13 percent tax rebate is still effective for boron-added HRC (width > 600 mm), Chinese producers may decide to add boron to their HRC and then export. When the new export tax rebate policy takes effect on July 15 next, it will become clearer whether Chinese producers will opt to focus more on their domestic market or whether they will add boron to their products and remain in the export markets.
Currently, Chinese producers and traders are trying to return to their orders before July 15, in order to continue to benefit from the old tax rebate rates.
Since Chinese producers have increased their export offers for new production, in particular CIS producers' exports to markets such as India and Vietnam may increase. In the most common ex-CIS HRC offers, ex-Ukraine material stands at $520-550/mt FOB Black Sea and ex-Russia material is at the level of $565-570/mt FOB Far East. As may be recalled, CIS producers, especially Russian producers, had concluded export deals for significant tonnages to Far East Asia at the end of 2008 and in 2009, due to the Chinese producers' high price levels.