Global HRC prices could move in either direction should the Chinese government cut export tax rebates. Some say domestic HRC sellers could raise their asking prices to offset the possible loss of government subsidies. On the other hand, with more sellers focussing on domestic sales, prices could come under pressure, believe other market participants.
China Steel and Iron Association had proposed reducing export rebate on HRC to 8-9pc from the existing 13pc. The final amendment to the effect is yet to come through.
An HRC importer based in Pakistan, however, believes such reduction of export rebates for steel products seems very unlikely.
On the contrary, Chinese HRC exports could soar amid strong auto demand globally in Q1 2021. Hot-rolled steel exports from China, including hot-rolled coils and strips totaled 6.7mn mt occupying over 12.5pc share in total steel exports in 2020.
In Pakistan, HRC imports could continue as the domestic supply is not sufficient. The gap between the domestic HRC offers against imported could remain wide, keeping Chinese prices competitive than most overseas markets and domestic scrap prices.
Some other Asian HRC suppliers were concerned about the negative impact on the steel imports in China. Reduction in rebate could lead to increased domestic consumption and may lower imports impacting Japanese and Vietnamese steelmakers, said a Japanese trader.
After the Chinese New Year Holiday, Chinese domestic demand and overseas trades are recovering steadily.
HRC export offers jumped above $710-720/mt fob. In the Shanghai spot market, HRC was offered at CNY4,870-4,950/mt ($754-767/mt), up CNY40-110/mt from a week earlier.