Posted on 26 May 2021
Market chatter is gaining traction that Chinese authorities will introduce an export tax on hot rolled coil, Kallanish notes. Certain suppliers including traders and mills have this week rolled out sales contracts requiring buyers to bear the full burden of any export tax implemented at the point of shipment.
Chinese exporters are once again making importers pay for any potential changes in Chinese policies governing Chinese steel exports. Chinese suppliers relied on this practice to minimise losses when the market was awash with rumours earlier this year that the 13% export rebate for HRC would be removed.
There are no details on the latest rumour other than that implementation may take place on either 1 June or 1 July. Chinese market participants say they are uncertain of the duty amount.
Chinese SAE 1006 HRC export offers have fallen this week to under $1,000/tonne cfr Vietnam. Offers are wide-ranging in price, at $930-990/t cfr Vietnam, depending on whether the Chinese mill is public or private, Chinese trading sources say. Chinese HRC transaction prices dipped to $980-990/t cfr for some position cargoes concluded early last week. Chinese HRC offer prices peaked at $1,060-1,100/t cfr during the week starting 10 May.
It will be hard to get buyers to agree to such clauses in a falling market, a Chinese trader says. As Chinese HRC prices are becoming competitive, an export tax seems necessary, another says. He hears the tax could possibly be 10-15% but is uncertain. “Buyers are asking sellers to pay the tax,” he adds.
Chinese suppliers started asking Vietnamese HRC buyers to accept these new terms on 24 May, a Vietnamese trader says. "No buyers have accepted,” he says. He says that only the smaller Chinese mills are offering cheaply. A Tier II Chinese mill is still offering at over $1,000/t cfr Vietnam and Indian SAE 1006 HRC is offered at $1,020/t cfr Vietnam, he adds.
Suppliers are also asking buyers to bear 100% of any possible rebate removal for Chinese cold rolled coil and hot-dipped galvanized coil exports. “They are surely putting these terms in the contract,” a Chinese trader observes.
Source:Kallanish
