Chinese flats exporters have had to delay the price increase they previously planned in the segment for HRC, as SE Asian buyers are still reluctant to negotiate. Contracts for HRC continue to be signed at $720-735/t C&F in the region, $10-20/t below initial quotations of Chinese material. No wonder that Chinese exporters have had to grant discounts while signing deals. In particular, Japanese buyers purchase Chinese HRC at $705/t FOB October shipment. Noteworthy, that interest for buying CRC remains low, and sporadic demand is registered in India mostly.
This week’s slight devaluation of the yuan also hampers the growth of export prices for Chinese flats. At the same time, domestic buyers are hardly able to support exporters, as stockists offer the material in the domestic market $5-15/t below export quotations after some drop in prices. Calculations exclude 17% VAT and take into account 9% and 13%VAT rebate on exports of alloyed HRC and CRC, respectively.
Nevertheless, market players believe export prices for Chinese HRC may continue to go up next week (around $10/t up). The Chinese may try to convince buyers that there is no alternative to lifts in prices for HR flats citing bullishness of Asian suppliers and an upturn in prices for iron ore. However, market participants doubt that exporters will be able to fully implement the rise. Asian buyers are in no rush to buy the material, that is why some traders even believe that prices will go up only in two or three weeks at earliest.
Domestic suppliers still profit from support of buyers more than exporters. However, end-users' demand has subsided somewhat this week, forcing suppliers to delay the lift they planned at least for a week. Moreover, under current conditions China's largest flats producer Hebei Iron & Steel has announced it leaves domestic quotations of September HRC and plate unchanged from August. At the same time, producer's CRC have grown in price by $8/t m-o-m.
Noteworthy, the situation in the segment for CRC is more favourable in domestic market mostly due to steadily high demand from car manufacturers amid stabilization of shipments of Japanese car parts last month. As previously reported, car sales increased by 6.7% y-o-y in China in July, reaching 1.01 mln units
( Source: www.metalexpert-group.com )