Chinese steel producers showed less interest in exporting steel last week amid mounting concerns that the central government may impose new export taxes, according to Mysteel’s latest weekly report. In the meantime, they opted to raise export prices by a large degree.
As of July 16, the export price of SS400 4.75mm hot-rolled coil (HRC) increased for the second week, Mysteel’s assessment found, with HRC prices rising by a larger $27/tonne on week to $925/t FOB from North China’s Tianjin port. This compares with the sedate $10/t on-week climb seen over the prior week.
The export price of B500B 16-25mm rebar also assessed by Mysteel reversed up $13/t on week to $782/t FOB from East China’s Zhangjiagang port as of July 16.
Chinese steel mills were not active in offering prices, worrying that export taxes could be imposed anytime in the near future, according to a Shanghai-based market insider.
“On the one hand, people are expecting crude steel output in China to decline, while on the other, China’s June exports remained high. Both factors increase the possibility that steel export taxes will be imposed,” she said.
Several steel producers in East China’s Jiangsu province, China’s second top steel producing province, were heard to have already received local government notices requesting them to rein in production in H2, in order to make sure output this year declines on year, according to Mysteel’s latest survey.
“Steel mills will have to reconsider the volumes they allocate for export, given that their output will be curbed this half,” an official with a steel mill in Jiangsu commented. “They have to readjust their production arrangements as well, in order to maximize profits and efficiency.”
Outside China, Russia will be adding new taxes on ferrous and non-ferrous products from August 1, with a base rate of 15%, and Vietnam is also planning to impose a 5% tax on semis exports in order to cool down the local steel market and lower the cost for steel end users, according to local media reports.
As for China’s imports of steel billets, trading was more active last week compared with the prior week. According to Mysteel’s tracking, the transaction price of imported billets, sourced mainly from Iran and Indonesia, was $685-690/t CFR China.
Written by Olivia Zhang, zhangwd@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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