@RareEarths It's necessary to look at the strategy. Remove export rebates on steel, force up the price of steel exports, and incentivise mills to focus on the domestic market, while still trimming production, and masking that as "emissions reductions" efforts. This in turn should drive down IO prices. Mills will be satisfied, as they make more on lower volumes, with much better margins in play. And perhaps more outbreaks will take the edge off international demand? That would be a bonus.
But with every play, there are risks, like the risk of world steel demand ticking up, just as Chinese supply eases off. This could lead to China loosing market share to other steel exporters, such as Korea and Japan. Also like the risk of domestic steel prices running wild as domestic demand continues to rise, but mills are being forced to ease off production. Rarely does market interference pan out as intended, and the supply of iron ore is currently inelastic, while globally, countries are gearing up for an infrastructure led recovery, so this may, indeed, be a case of government interference in the market really backfiring.
But anyway, MySteel is quite a fan of the play, it seems.China's CRC export price surges on rebate removal
Chinese export prices of carbon steel cold-rolled coil (CRC) and galvanized steel (GI) surged last week following Beijing’s decision to cancel the 13% tax rebates o...
https://www.steelmint.com/insights/chinas-crc-export-price-surges-on-rebate-removal-236829
Chinese export prices of carbon steel cold-rolled coil (CRC) and galvanized steel (GI) surged last week following Beijing's decision to cancel the 13% tax rebates on them effective August 1, according to Mysteel's latest weekly report.
Mysteel's assessment of the export price of SPCC 1.0mm CRC increased by $60/tonne on week to $1,003/t FOB from North China's Tianjin port as of last Friday. Similarly, the export price of DX51D+Z 1.0mm hot-dipped GI spiked by $90/t on week to $1,075/t FOB from Tianjin port also as of last Friday.
Mills and traders reacted quickly after the central government's July 29 announcement removing the rebates, and all the cost increments resulting from the change have been added onto their offer prices already, a Shanghai-based analyst noted.
"But despite this, some buyers still find the prices acceptable, and some (export orders) are still being negotiated," she said.
As of July 30, the CRC export offer price from Japan was at $1,120/t FOB on average while that of Russian CRC was $1,040/t FOB, according to Mysteel's tracking. The offer prices of GI products from Japan and South Korea were both around $1,300/t FOB.
Even though Chinese steel exports remain generally price-competitive, the export volumes have been shrinking, market sources noted. This is because the Chinese mills have less interest in exporting, and because of the slump in demand for Chinese steel in major destinations such as ASEAN.
"The large domestic steel mills have all adjusted their planned allocation for exports, in order to better satisfy domestic demand," a second Shanghai-based market insider observed.
A large-sized producer based in East China confirmed this, saying that his company has slashed its planned export volumes for the remaining months of this year.
On the other hand, increasing numbers of COVID-19 cases throughout Southeast Asia have greatly dampened demand.
With new cases soaring, the Vietnamese capital of Hanoi introduced new lockdowns from July 24 and currently, one third of the country's around 100 million people are subject to lockdown orders.
"COVID-19 cases in ASEAN are pushing steel demand down. Buyers in Vietnam want to postpone the steel shipments they have already contracted because of lockdowns," an India-based industry source also noted.
Last week, the export price of China-origin SS400 4.7mm hot-rolled coil (HRC) had increased by $5/t on week to $940/t FOB from Tianjin port as of July 30, according to Mysteel's assessment. Similarly, that of B500B 16-25mm rebar also increased $5/t on week to $792/t FOB from East China's Zhangjiagang port.
Written by Olivia Zhang, [email protected]
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