Ex-China HRC prices down amid low local buying, possible tax rebate cut rumoured

Tuesday, 26 January 2021 17:02:09 (GMT+3)   |   Shanghai
       

Ex-China HRC offer prices have moved down over the past week amid the downtrend in scrap prices in the overseas markets - which has worsened the already weak sentiment on the buyers’ side - and the weak demand in the local market in China ahead of holidays and also due to the severity of the Covid-19 pandemic.

At present, export offers for boron-added SS400 HRC given by major Chinese mills are at $630-660/mt FOB for April shipment, with a midpoint at $645/mt FOB, moving down by $15/mt on average compared to January 19.

The tradable value for this grade has decreased from $640-650/mt FOB a week ago to $630-645/mt FOB, with some steel mills cutting their export offer prices significantly. Deals for position cargoes from traders, according to sources, were reported for ex-China SS400 HRC at $630-640/mt CFR Vietnam last week, which equals $620-630/mt FOB.

For Chinese SAE1006 re-rolling grade HRC, offers have been heard at $670/mt CFR Vietnam from some mills and traders, which equals $660/mt FOB. A deal for SAE1006 grade HRC from China was done at $660-665/mt CFR Vietnam last week compared to the previous bookings at $670/mt CFR. Moreover, there has been information about the sale of a fresh position cargo of Chinese HR strip at $650-660/mt CFR recently.

The latest sale of re-rolling grade HRC from a trader from China to Turkey has been heard at $685-690/mt CFR, down from $705-720/mt CFR in the previous round of sales earlier this month.

“The rumours about adjustment of export rebates for HRC in China have made mills and traders cut their export offer prices, while the continuing severe situation regarding the Covid-19 pandemic has exerted a negative impact on prices,” an international trader told SteelOrbis.

Market participants have been actively discussing the recent rumours of a possible change in the current tax rebate for HRC exports from 13 percent to 8 percent, which could put pressure on exporters. No official announcement has been heard so far.

During the given week, HRC prices in the Chinese domestic market have seen slight declines, while demand has been sluggish as downstream users have started to gradually leave the market ahead of the holiday. Meanwhile, transportation costs have increased amid the approaching Chinese New Year, bolstering HRC prices to some extent. Downstream users have been unwilling to build up stocks of HRC. It is thought that HRC prices in the Chinese domestic market will likely move sideways in the coming week.

Domestic HRC prices in China are at RMB 4,420-4,490/mt ($682-692.5/mt) ex-warehouse on January 26, with the average price level RMB 15/mt ($2.3/mt) lower as compared to January 19, according to SteelOrbis’ data. Compared with the price level on Monday, January 25, local quotations are RMB 20/mt ($3/mt) higher on January 26.

As of January 26, HRC futures at the Shanghai Futures Exchange are standing at RMB 4,428/mt ($683/mt), increasing by RMB 44/mt ($12/mt) or 1.0 percent since January 19.

$1 = RMB 6.4847


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