HRC prices in Asia fall further, fears of new export tariffs in China emerge

Thursday, 20 May 2021 17:30:39 (GMT+3)   |   Istanbul

Local HRC prices in China have recorded another day with a sharp drop on May 20 and export prices have continued to go down too, as fear about the possible introduction of export tariffs have emerged in the market.

Though official offers from large Chinese mills have remained at $1,010-1,060/mt FOB for SS400 HRC, a number of smaller mills have reduced their offers to $960-980/mt FOB. Moreover, some position cargoes are already rumoured to have been negotiated at $950-960/mt FOB. “China is aggressive now. Many different offers are in the market at present,” an Asian trader said.

Offers from China for SAE1006 HRC to Vietnam have been reported at $990/mt CFR today, down by $20-25/mt from a contract at $1,010-1,015/mt CFR reported to Vietnam earlier this week. This level is heard as already having been fixed in a deal, but no further deals have been reported.

Offers to Pakistan from China for position cargoes of 2,000-3,000 mt dropped to $1,000/mt CFR on May 19 and may keep declining, sources believe.

The average domestic HRC price has dropped by as much as RMB 425/mt ($66/mt) today, coming to RMB 5,590/mt ($867/mt) ex-warehouse, according to SteelOrbis’ information. This means, according to traders, that Chinese mills will be able to provide lower prices to the export market in the near future.

Rumors have indicated that the Chinese government will likely introduce export tariffs on steel products, aiming to lower production utilization rates and reduce the carbon footprint of the steel industry. However, no official notice has been issued yet.

As previously reported by SteelOrbis, China lifted the export tax rebate for some steel products as of May 1. The adjustments in the tax policy for steel imports and exports are a part of policies to curb the quick rises in iron ore prices, control production capacity rates, and reduce the outputs, which are the new requirements for a new development phrase in China. According to the China Iron and Steel Association (CISA), against the background of a “carbon peak and carbon neutrality”, the adjustments in the steel import and export policy highlight the national policy orientation.

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