SHANGHAI (Scrap Register): After return from the Golden Week holiday, Chinese producers raised their export offers, starting a price rally in the Asian market. Supported by increased raw materials costs, supplies from Taiwan, Japan and South Korea followed suit and ASEAN imports HRC index jumped by $55 a ton during the month, closing at $440 a ton, said the Steel Index in a report.
The Golden Week holiday in China during the first week of October brought the Asian market to a standstill. But as soon as activity resumed, Chinese steel producers increased their export prices on the back of bullish domestic and futures markets. Other HRC suppliers, such as Taiwan, Japan and South Korea quickly followed suit, citing increased raw materials prices as a justification for the rise.
Expecting this price rally to last, several Vietnamese re-rollers and stockists reacted with aggressive bids in order to book all available allocations, giving the market a spur.
China remained the most competitive HRC supplier in the ASEAN market, although premiums for Taiwanese, Korean and Japanese material got smaller as Chinese prices rose during the month. In the last week of October re-rolling grade of HRC from Taiwan was transacted close to $455 a ton (CFR ASEAN Port), a $15 a ton premium to Chinese material, while Japan and Korean premiums were between $20-30 a ton.
In the SS400 grade market, Vietnamese importers were mostly bearish, as retail prices in the domestic market were below import offer levels. As stockists avoided placing new orders, the number of transactions dwindled and the price gap between SS400 and SAE grades widened to $16 a ton.
China’s steel purchasing managers’ index (PMI) bounced back by 1.2 points to 50.7, the highest level in five months. Major sub -indices, including production and new orders, continued to show expansion, while the inventory sub-index fell to a six-month low. However, the new export orders indicator slid for the second consecutive month, to the lowest level since April.
China Steel Logistics Professional Committee (CSLPC), compiler of the PMI survey, commented on the strength of automotive and household appliances sectors, which, together with the real estate and infrastructure investment, supported domestic demand and offset negative effects from rebounding output and declining export orders.
Despite a significant 7.4% year-on-year fall in China’s crude steel production in August, in the first nine months of the year the output increased by 0.4% y-o-y, according to data released by the National Development and Reform Commission.
Chinese steel exports totaled 8.8 million tonnes in September, down by 21.8% y-o-y, according to the General Administration of Customs. This is the second consecutive month that the world’s largest steel exporter seeing tonnages falling on an annual basis, bringing down the total export volume close to last year’s level. The country exported 85.12 million tonnes of steel in the first nine months of 2016, up 2.4% from a year ago.
According to the latest statistics, Japan’s total exports of HR coils and plate decreased to 1.25 million tonnes in September, out of which the amount exported to ASEAN fell by 48kt (down by 11% m-o-m).
In September South Korea exported a total of 212kt HR coil and plate into ASEAN countries, an 8% m-o-m increase, data collected by the Korea International Trade Association showed.