Posted on 18 Aug 2021
Recent market rumors that Beijing will impose new taxes on steel exports starting this month have further dampened Chinese steel export activity where business is already at a low ebb due to lack of price competitiveness and the worsening COVID-19 situation, market sources said.
Market chatter has suggested that export taxes in the range of 10%-20% will be imposed on hot-rolled and cold-rolled flats and pipes from this month, though as of August 17, no related government announcement had been released, Mysteel Global notes.
“At present, China’s hot-rolled coil (HRC) prices are almost on par with average HRC prices in Asia, so any new taxes may completely remove the price competitiveness,” a Shanghai-based industry source commented.
As of August 13, the export price of China-origin SS400 4.75mm HRC was unchanged on week at $934/tonne FOB from North China’s Tianjin port. In comparison, the export price of similar grade coils from Vietnam was only $920/t CFR ASEAN as of last Friday, also unchanged from the prior week, according to Mysteel’s tracking.
Aware of the possible impact of any new taxes on their business, many Chinese steelmakers have just been fulfilling previously-signed orders, according to her. They have also suspended acceptance of new orders and have stopped providing offers.
A South China-based steel trader noted cooling interest from the buyers’ side too.
“Chinese prices are not workable as buyers are unwilling to bear the export tax risk,” she stated, adding that her company is now trying to source from other origins like Vietnam and India to “see if buyers can accept the cargo and prices.”
On the other hand, Chinese imports of steel semis slowed last week. “Increasing numbers of positive coronavirus cases inside China have been slowing logistics,” a second industry source based in Shanghai commented, adding that the country’s appetite for imported billets has waned.
Mysteel understands that foreign vessels entering China will need to wait around 14-21 days due to the new COVID-19 prevention and control measures.
Last week, the import price of 5sp 150*150mm billet was around $700/t CFR China for September shipment, down $5/t on week, according to Mysteel’s tracking.
Source:Mysteel Global
