In this report, we will examine the latest status of China hot rolled coil transactions from the perspective of Metal Bulletin. The price of hot-rolled coils in China’s domestic market rose on Tuesday (August 10th), indicating growing expectations of declining production following the release of Tangshan’s new production plan to improve air quality at the upcoming Winter Olympics in Beijing. The Chinese futures market is likely to create price volatility in the steel sector. Although China is currently trying to lower the overall level of steel prices, this will not last. In the following, we will evaluate this issue and explain it. Please be with Artan Press.
*** Price evaluation of hot rolled coils in China domestic market
Tangshan, China’s main steelmaker, plans to extend restrictions on steelmaking and truck transport until March 13, 2022, according to a draft by environmental officials in Tangshan City published by a local journalist. This is under the pretext of ensuring air quality during the games. For this reason, we are witnessing the growth of prices in China’s domestic hot-rolled coil market. Market observation shows that in the eastern states of China (Shanghai, for example), hot-rolled coils traded between 5,760-5,820 yuan ($ 889-898) per ton, an increase of 40 yuan per day alone. Recorded per ton for this steel product.
*** Calm markets in the hot rolling coil section
According to Artan Press, quoting the fast market, commercial activities throughout the stock market in the hot rolling coil sector have significantly improved compared to the previous day. Once prices showed signs of stability. Downstream users increased their purchases. The momentary price increase was smaller than the 110 yuan increase in most hot-rolled coil futures on the Shanghai Stock Exchange. According to industry analysts, demand has eased seasonally and has led to measures to curb Covid-19 for the patience of some more investors.
*** Take a look at China’s steel export indicators
Regarding the evaluation of export indicators of hot-rolled coils, it should be noted that the main port of China with the FOB export format is priced at $ 917.5 per ton. The exchange rate increased by $ 0.83 per ton compared to the previous day. Therefore, in this section, we see that export prices have not experienced significant changes. The hot rolling coil export activity has been poorly assessed and the tax uncertainties defined for sellers and buyers have somehow pushed the market back. Some malls have priced their hot rolling coil bids at around $ 920 per tonne FOB China. Meanwhile, in some periods, China’s hot-rolled coil also cost more than $ 1,000, but it did not have a customer. Sources say factories are resisting falling prices.
*** Increased risk of steel transactions due to rising taxes
According to two sources in eastern China, it is speculated that Chinese tax authorities have imposed a 10-15 percent or 15-20 percent duty on exports of hot-rolled coils, cold-rolled coils and galvanized coils. In this regard, buyers are obliged to accept the risks of possible export duties in the offers. China is in any way reluctant to suppress prices and increase the risk of steel trading in the market. Due to the per capita growth of production and construction in China, we are witnessing sabotage and complication of the trading process in the steel market by the Chinese.
*** Analysts’ assessment of China hot-rolled coil price
In the current situation, prices are very high for buyers. Analysts at current prices do not consider hot rolled coils suitable for import, investment and even purchase. Some investors and analysts have stated that there are many risks due to the tax uncertainty on the export of hot-rolled coils. They will wait until September 1 to see if there will be trade opportunities or if the market will turn back.
Environmental factors in hot rolling coil pricing
The largest hot-rolled coil contract traded in August at 5,856 yuan per tonne on Tuesday, up 110 yuan from Monday’s close. Decarbonization of the steel market is a good excuse for rising coil prices. The latest analysis from Metal Bulletin shows that green steel will cause a profound wave of price increases for steel markets. There are new trends in global steel trading that we have not seen in any period of time. This has made it very difficult and sometimes impossible for markets to provide accurate analysis and specify accurate targets. We need to get used to rising prices right now.
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