ASIA HRC: Panic selling cuts spot prices despite China export tax talk

Panic selling in the major Vietnamese hot-rolled coil import market has let prices dip below $1,000 per tonne cfr Vietnam for SAE1006-grade materials this week, sources said on May 21.

Market sentiment was especially weak on Thursday, with sellers attempting to offload material as low as $970-980 per tonne cfr Vietnam while there were also offers at $1,000 per tonne cfr Vietnam.

Back-to-back offers from major Indian steel mills and a major Chinese steel mill were at $1,030-1,080 per tonne cfr Vietnam, as well as at $1,100 per tonne cfr Vietnam, sources said.

There were also offers heard at $1,010 per tonne cfr Vietnam, which sources said were position cargoes.

There was market chatter that a transaction had been concluded at $1,010 per tonne cfr Vietnam for a Chinese cargo on Wednesday, although the counter parties could not be confirmed.

“Even if confirmed, the transaction may eventually not be completed because of the falling spot market,” a Vietnamese trader told Fastmarkets on May 21.

Bids from buyers were below $950 per tonne cfr Vietnam, especially from those looking to procure cargoes at favorable prices amid the bearish sentiment, however, traders said these bids are unlikely to result in any transactions.

Privately-owned steel mills in China were offering back-to-back cargoes at $970-980 per tonne fob China for SS400-grade materials, as well as at $900 per tonne fob China for hot-rolled strip - equivalent to $925 per tonne cfr Vietnam.

Position cargoes of SS400 from privately-owned mills were offered at $960 per tonne cfr China, which is equivalent to $930 per tonne fob China, but sources said they believe the spot market is stabilizing from this week onward and that perhaps the drastic price falls would stop soon.

“The market is calming now and the current price level may become the new norm for a while until China announces new policies,” a trader in Singapore told Fastmarkets on Friday.

Strong demand in the United States and Europe could also help to support prices, a buyer source in Vietnam said, especially if China really does impose export taxes on HRC and limit its seaborne supply.

New export taxes?
There was market discussion that China will impose new export taxes on steel exports from June 1, leading buyers in the region to mull renewed changes to trade flows.

Chinese prime minister Li Keqiang said this week that China would impose more measures to cool the fiery commodity markets, including imposing export taxes on steel products.

While this is aimed at increasing domestic HRC supply, it could cause more supply tightness in the seaborne markets, sources said.

“It could make purchasing substrate a bit more difficult, especially because China has already removed export rebates for HRC,” a buyer source in Vietnam told Fastmarkets on Thursday May 20.

This would mean limited choices to purchase HRC, especially due to the swing supply from major producer India, and favorable domestic markets in Japan and South Korea, sources said.

“This is also why Indian steel mills are maintaining offers at $1,100 per tonne cfr Vietnam,” a Vietnamese trader told Fastmarkets on Friday May 21.

Fastmarkets’ weekly price assessment for steel HRC, import, cfr Vietnam, which mainly looks at 2-3mm rerolling-grade SAE1006 HRC and equivalent products, was $970-1,000 per tonne on May 21, down by $80-100 per tonne from $1,050-1,100 per tonne a week earlier.

Offers for east Asian HRC remained at $1,100 per tonne cfr Vietnam and above, with limited interest from buyers due to the lower offers from India and China, sources said.

South Korea’s Hyundai Steel is not offering any export cargoes due to an incident as its steel mill in Danjin.

Key market participants that spoke to Fastmarkets think that spot prices remained at $1,050-1,100 per tonne cfr Vietnam.

Fastmarkets’ weekly price assessment for steel HRC (Japan, Korea, Taiwan-origin), import, cfr Vietnam was $1,050-1,100 per tonne on Friday, unchanged from the previous week.

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