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Some Chinese traders have been willing to close HRC deals for January shipments only if Vietnamese customers accept a contract clause stating that any additional costs coming from cuts in the tax rebate should be equally shared between seller and buyer, sources told Steel First.
“They want to share that cost by 50:50 if the rebate is revoked,” one market participant based in Ho Chi Minh told Steel First on Tuesday October 28.
One source at one of Vietnam’s largest HRC re-rollers confirmed the information.
“Yes, they want to do this because it will affect prices, but buyers won’t accept that clause,” the source said.
Steel First has not heard of a single deal booked under such condition.
Offers for SAE1006-grade HRC of 2-3mm thickness have remained largely unchanged from 10 days ago, ranging from $490 per tonne cfr for material from second- and third-tier Chinese mills to $505-510 per tonne cfr from first-class steelmakers.
The highest confirmed booking price continued to be the $503 per tonne cfr level recently agreed by a local re-roller for as much as 60,000 tonnes of HRC from a mill located in north-eastern China’s Liaoning province.
But sources have not ruled out that more bookings could have been recently concluded at prices as high as $505 per tonne cfr.
The source at the local re-roller pegged current price levels at $500-505 per tonne cfr for re-rolling HRC from first-tier mills.
Market talk concerning a possible tax rebate cut intensified after Chi Jingdong, the deputy secretary-general of the China Iron & Steel Assn (Cisa), was quoted in media reports as saying that China’s steel exports would decrease next year following the proposed abolition of a tax rebate.
Sources in the Chinese HRC export market have already started to speculate about price increases if a policy change is indeed implemented.
Steel First assessed Southeast Asia HRC import prices at $490-505 per tonne cfr on Monday October 27, widening upwards from $490-503 per tonne cfr previously.