Asian long product slowdown as market watches for tariff effects

No instant reaction has been observed in the Asian market to the recently announced 10 percent export tariff imposed by China on certain steel products. Given that China has been so dominant in supplying billets to the East and South East Asian markets, everybody is now waiting for the new conditions to take effect in order to see what changes China's market share will undergo. Industry insiders talk about an inevitable supply increase in the Chinese domestic market which will eventually result in greater focus on long product exports with a view to replacing exports of billets. Chinese billets are expected to be traded in the export markets in the short term, despite the additional 10 percent cost, which will most probably be borne by both producers and buyers. Based on reports received, the current situation of the long product markets is weak. Some wire rod offers from Chinese mills for Asian markets have been heard at very low levels, even moving close to the billet price levels. The common view is that the slowdown in billet exports will boost long product exports. In view of the current market situation of long products, weak both in the domestic and export markets, it has now become a serious issue in the minds of market players just how this situation is going to be handled. Chinese long producers will have to maintain their production rates and this will most probably force them to offer more and more competitively in exports. However it is also likely that the softer billet prices in the local market will help long producers in this respect.