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News Release from: MEPS (International)
Edited by the Manufacturingtalk Editorial
Team on 29 June 2007
Chinese tax levy brings down steel strip
prices
The Chinese government's export tax changes have brought about a fall in steel strip prices in China and have failed to raise product export prices.
Prices in China have started to fall as the Chinese government's export tax changes led to increased supply in the market Traders are considering the implications of the new rules before offering
This article was originally published on Manufacturingtalk on 9 Oct 2006 at 8.00am (UK)
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In Japan, the export climate is healthy and domestic sales to end-users such as automotive and shipbuilding are strong.
However, total domestic inventories of strip mill products held by steelmakers and service centres, at end April, climbed by 1% - the second consecutive monthly rise.
Quayside stocks rose sharply by 18,000 tonnes in the same time frame.
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Japanese traders insist the rise was a 'one-off' caused by a surge in Chinese exports ahead of the removal of the tax rebate.
US strip mill transaction prices softened further over the last month as scrap costs continued to slide.
The downturn is most apparent in the hot rolled category.
Real consumption has remained lacklustre, causing service centre inventory depletion to take much longer to complete than was initially envisaged.
Delivery lead times quoted by domestic mills have reduced to four weeks or less in some instances.
There is a dearth of import offers.
Domestic mills have turned to export markets, encouraged by the weak US dollar and good demand elsewhere.
The continuing strength of the Canadian dollar is impacting values in that country, with US mills actively selling at cheap prices.
Third country imports are low by recent standards and not now the price setters.
Service centre inventories are still higher than warranted by the mediocre demand levels, leading to a very price competitive market.
Although mill values have weakened compared to last month, it remains to be seen if this indicates just an early arrival of softness ahead of auto and other industrial Summer shutdowns or something more significant.
In South Korea, Posco has said it will absorb higher iron ore costs in order to ensure that domestic steel prices stay competitive against imports.
CSC has released its third quarter steel prices for the Taiwanese market with an average increase of 2.4%.
This is not as much as some downstream companies feared.
Chung Hung lifted official values last month but, despite escalating slab costs, the company has left prices unchanged for June.
The Polish economy is expected to continue its solid expansion, driven by private consumption and investment.
Booming industrial output is also creating high demand in the Czech/Slovak markets, where stocks are adequate.
Import quantities are stable and certainly cause no price disruption.
The price trend continues to be very positive.
The West European strip market is relatively quiet ahead of the conclusion of price negotiations for third quarter business.
Service centres, which are well stocked until September, are in no rush to settle.
Traders are waiting for new offers from Chinese mills, following the recent changes in export taxes.
EU steelmakers appear to be controlling production in-line with demand quite well.
* Source - MEPS International Steel Review.
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