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Chinese steelmakers were not keen to chase export business last week, due to hot domestic sales and the uncertainties still hanging about whether the steel export tax rebates would be cut, industry sources said.
"Export trading has been very slack recently. All players are waiting for a definite decision on the tax rebate cuts," an industry source based in Beijing observed. The price disparity between the overseas and domestic markets has been widening, he acknowledged.
As of April 2, average price of SS400 HRC sold to the ASEAN region was $845/tonne CFR, while on the same day, the Q235B HRC price in Shanghai was Yuan 5,520/t ($842.7/t) including the 13% VAT.
Therefore, the price disparity reached Yuan 748/t (based on CFR price*exchange rate + tariff + VAT Vs China's domestic price), up Yuan 123/t on week, some institutions calculated.
The price gap, even having widened, is "just able to cover the increment in costs if all the 13% rebate on hot coil is removed," explained a Shanghai-based market source. However, the domestic mills are not willing to bear the risks, especially when the domestic market is still hot, she said.
"And because now the offers are generally on CFR basis, the shippers face the risks of further increases in freight as well," she added.
Most Chinese steel mills have stopped offering prices while those who are offering have pushed prices higher, considering the robustness of domestic sales, according to institution's tracking.
Source: Steelmint
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