International Steel Prices

Chinese Steel Export Tax Rebate Rumors Re-Surface
Written by John Packard
December 14, 2014
The subject of how China is going to deal with their surging steel exports continues in earnest after the release of the most recent Chinese export data. As the graphic shows below, the Chinese steel mills have spent this calendar year flooding the world markets with their steel excesses. In November the Chinese steel mills exported 9,720,000 metric tons (10,714,000 net tons) of steel products around the world. This is an increase of 12.1 percent over October’s 8,550,000 metric tons of steel exports.
Steel Market Update has been communicating with one of our trading sources in Asia who sells iron ore to the Chinese mills and trades steel out of the Chinese mills that is then shipped to locations around the world. We have been discussing the issue of VAT (Value Added Tax) which is placed on steel products and the rebates which are available on steels containing boron. The rumor has been that the Chinese government would remove the boron-added rebate.
For awhile the boron-added discussion dissipated and many thought the issue dead. Now, new rumors are coming out of China and the possible announcement date is this coming week (December 15-20, 2014). Here is what our trading source had to say earlier this month on the subject:
“There are unofficial rumors from reliable sources, but the announcement is not official as of yet. It is that ALL Export Tax Rebates are to be AXED. If this is true, Iron Ore will plummet, Domestic China market will plummet etc. as the export market will disappear unless there are some loopholes or Iron Ore drops the equivalent of the Tax Rebates being axed. Again, this is only rumors and it will be 15th-20th before any Official announcement comes. I will keep you updated.
“Ore will steady at USD68-70/mt before the announcement.
“Export Offers are idle waiting for this announcement.”
Iron ore spot pricing has indeed been holding steady at the $68-$70 per dry metric ton level over the past two weeks. We will see if the Chinese government makes a move this week or turns a blind eye to the massive exports of steel products which are creating political and ultimately economic turmoil for China.

John Packard
Read more from John PackardLatest in International Steel Prices

Price gap between US CR, most imports widens
Cold-rolled (CR) coil prices ticked lower in the US this week, while prices in offshore markets mostly diverged and ticked higher.

CRU Outlook: Global steel sheet prices set to rise, but the near-term uptrend will be limited
Sheet prices are expected to increase in the coming weeks in most markets. However, rising domestic capacity in the US, subdued demand in Europe, and high inventory levels in China and India will limit price near-term uptrend.

Some Asian HR prices theoretically lower than US HR tags despite 50% S232 tariff
Domestic hot-rolled (HR) coil prices ticked down this week after holding flat since mid-August. Offshore prices largely all moved higher week over week (w/w), widening the margin between stateside and foreign product.

CR import price gap widens with US
Cold-rolled (CR) coil prices ticked lower in the US this week, while prices in offshore markets diverged and ticked higher.

Spread between US HRC, imports widens
Domestic hot-rolled (HR) coil prices were flat this week for a third straight week. Offshore prices all moved higher w/w, widening the margin between stateside and foreign product.