Cash flow requirement to pay bank loans has compelled Chinese steel manufacturers to export HRC even at losses.
Chinese market re-opened today after 1-week (1-7 Oct) National day holiday. It has been heard from market sources that HRC export offers from China fell further by USD 5/MT.
Currently, 2.5 mm HRC is being offered in the range of USD 285-290/MT. Whereas, offers from Korea and Japan are in the range of USD 345-350/MT (all prices are on CNF India basis).
September, a peak month for Chinese construction activities, didn’t see any revival in steel prices. As per SteelMint Research, China’s HRC export offers fell by about 7% in the month of September.
However, when Apr-Jun’15 and Jul-Sept’15 quarters are compared, it can be inferred that Chinese HRC prices fell by about 17% in Jul-Sept’15 quarter.
The key problem underlying decline in Chinese prices is poor buying interest along with unwillingness of steelmakers to cut their production resulting in oversupply in Chinese market.
With end of year approaching, Chinese mills have to pay back their bank loans. Hence, they are ready to sell their HRC output even at losses in overseas market.
Safeguard duty helping Indian steel industry
20% provisional duty announced by Indian government on hot rolled products has brought some restrictions in HRC imports. The domestic HRC prices have stabilized post safeguard duty.
However, with safeguard duty impostion, steel is being exported in the form of CRC, pipes and tubes.
DG Safeguards have recently released a list of affected parties, who are against safeguard duty. This includes POSCO-India, CORSMA (Cold Rolling Steel Manufacturing Association of India) and BIMA (Bombay Iron and Steel Merchant Association). It is anticipated that these affected parties may file petition with DGS, requesting removal of safeguard duty on HRC.
Leave a Reply