Ex-China HRC offer prices have moved up further, following previous rises amid improvement of futures and price hikes in the local market from some Chinese steel mills, like Baosteel. At the same time, most steelmakers agree to bear the potential risks of tax rebate cut. The uncertainty in the export tax rebate cut has persisted as the final decision has not been voiced and it is still unclear will the rebate cut be to zero or to 4 percent, sources told SteelOrbis.
At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $900-920/mt FOB for June shipment, with a midpoint at $910/mt FOB, moving up by $35/mt on average compared to last week and up $17.5/mt compared to Friday’s level.
Following deals at $87f0-880/mt FOB earlier last week, a few transactions for boron-added SS400 HRC from China were heard at $880-890/mt FOB this week, but overall trading activity has been lower than last week. As some customers are not sure how much the rebate will be cut, they have not been willing to accept higher prices after $90/mt surge in deal prices last week. If the export tax rebate will be cut to 4 or even 8-9 percent, instead of to zero, this will mean for the buyers too high prices and possible declines. At the moment, most Asian traders see the workable price level for ex-China SS400 HRC at still $875/mt FOB on average.
Offers for rerolling SAE1006 HRC from China have been heard in the wide range of $900-940/mt CFR Vietnam and above due to different risk sharing terms. Offer prices of ex-India SAE1006 HRC to Vietnam have increased to $935-950/mt CFR Vietnam, though buyers have been focusing on local purchases at $910-915/mt CFR. The workable price level for import HRC in Vietnam has remained at $920/mt CFR on average for now.
“HRC [futures] prices have seen big rises today amid a new round of production restrictions being heard for the near future, meanwhile, exporters in China chose to raise their export offer prices for HRC and bear potential risks of tax rebate adjustment,” an international trader told SteelOrbis.
During the given week, Chinese HRC prices have seen big declines amid the decreasing HRC futures prices. Meanwhile, bearish sentiments prevailed among market players. However, inventory of HRC has been at relatively low level, which provided certain support to HRC prices. Domestic HRC prices in China are at RMB 5,390-5,450/mt ($823-833/mt) ex-warehouse on April 13, with the average price level RMB 160/mt ($24/mt) lower as compared to April 6, according to SteelOrbis’ data.
Nevertheless, sentiment in the local Chinese HRC market has improved on Tuesday, April 13 with HRC futures at the Shanghai Futures Exchange adding RMB 115/mt ($17.6/mt) or 2.17 percent compared to April 12 to RMB 5,403/mt ($825.5/mt).
$1 = RMB 6.5454