Lower prices give boost to Chinese steel exports

Chinese steel export business for next January delivery, mainly involving hot-rolled coils (HRC), picked up last week after export prices slumped further, Mysteel's latest weekly report indicated.

The export price of SS400 4.75mm HRC assessed by Mysteel had declined by a large $53/tonne on week to $829/t FOB from North China's Tianjin port as of November 5, making for the price's fourth consecutive on-week fall.

"Domestic steel transaction prices have been plunging and export prices have followed. But the falls in overseas steel prices have been slower so some (China-origin) products have regained their price advantages," a steel analyst based Beijing observed. He noted the marked increases in export orders signed by both steel producers and steel traders last week.

"By simple calculation based on the current prices, you can probably still sell hot coils in the domestic market at prices slightly higher than overseas, but the price falls in the domestic market have been too steep and too rapid for us to resist," an official from a steel mill in Northeast China noted, explaining the reason for the keener interest of mills in exporting.

"No one can predict where domestic prices are going in the next two months," the Beijing analyst agreed.

Despite the comparatively high offer prices the mills are tabling for overseas business, the actual transaction prices of HRC for export may be lower than $800/t FOB, market sources say. In comparison, China's national price of Q235 4.75mm HRC for domestic sale stood at Yuan 5,140/t ($804/t) including the 13% VAT on November 5, according to Mysteel's assessment.

A major steelmaker based in East China was heard to have signed HRC export orders in large quantities with buyers in the ASEAN region recently. "I believe the shipment volumes may rebound notably next January," an steel exporter based in South China stated.

Last week, signs of improvement were also seen in Chinese exports of other major finished steel products including cold-rolled coil (CRC) and rebar, with prices falling further, the weekly report showed.

As of November 5, the export price of SPCC 1.0mm CRC assessed by Mysteel had decreased $49/t on week to $935/t FOB from Tianjin port. On that day, the export price of CIS-origin CRC of the comparable grade was $985/t FOB from the Black Sea, according to Mysteel's tracking.

Written by Olivia Zhang, zhangwd@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.