More offers for non-VAT exports of HRC and wire rod from China have started to be seen this week and, even though in general this trading has remained limited and the traders are still cautious, a further improvement in export activity is awaited by the end of May.
In the HRC market, the non-VAT offers from China are still seen mainly in Asia, though some more offers and some deals have been reported this week. In particular, there have been several deals for small quantities of SS400 HRC from China to Vietnam at $535/mt CFR, while the previous offers reported earlier this week were standing at $540-545/mt CFR. “I would say that offers [for non-VAT exports] are still limited, but it is a matter of time,” a source said. Lower offers for Chinese HRC to more distant markets like the Middle East and Turkey have not been reported yet.
Also, in the wire rod segment, early this week offers for Chinese wire rod from traders were coming at $540-545/mt CFR to the Philippines and Thailand, while they have come down to $535/mt CFR late this week and some market sources believe that $530/mt CFR is achievable on Friday. “If you have a look at Chinese mills’ FOB prices [which are at $530-540/mt from second-tier mills and $550/mt from first-tier mills], it is obvious that there are more non-VAT offers now,” one of the sources trading wire rod commented.
“Previously, let’s say ten traders were involved in non-VAT trading in some markets, after the inspections started [in April] the number fell to three or four. But this week we see more lower offers as local demand is insufficient,” a Singapore-based source said. Market sources are waiting for May 15 when some response from the government is expected to be released. If there are no concrete measures voiced, the export of non-VAT steel will again gain pace, according to market sources polled by SteelOrbis. “China just needs these exports. Personally, I do not believe that the Chinese industry can survive without them,” another trader said.
