ASEAN HRC Steel import prices plunge during March

SHANGHAI (Scrap Register): ASEAN HRC Steel Import prices lost $43 a ton during the course of March, closing at $473 a ton, reported the Steel Index.
In early March, SAE grade Chinese-origin HRC was offered well above $510 a ton CFR Vietnam for May shipment. As a result, buyers opted for Indian-origin material, offered at a lower level, and deals were seen executed in the $500-506 a ton range for May shipment, CFR Vietnam.
By late March, a slump in Chinese futures prices, coupled with poor market outlook, led to a fall in HRC prices, and offers for Chinese-origin HRC were made between $475-485 a ton CFR Vietnam, with traders taking short position. Despite low offers by Chinese traders and mills, buyers were cautious, and avoided bidding due to near-term price uncertainty. With the decline in Chinese asking prices, Indian offers retreated from the Vietnamese market.

Other suppliers, such as Taiwan, Japan and South Korea, were unfazed by the fall in Chinese prices, keeping their offers unchanged. Deals for Japanese material were executed in the $520-580 a ton range, and Taiwanese HRC around $530 a ton, all CFR Vietnam for May shipment. 
Japanese steelmakers, counting on strong domestic demand from the Tokyo Olympics construction projects, prioritized domestic orders over overseas demand and were not active in the ASEAN market.
China’s steel purchasing managers’ index (PMI) lost its momentum and fell to 50.6 in March, down by 0.8 points from a month ago. However, the PMI reading remained in expansion territory (above 50 points) for a second month in a row.
Major sub-indices, including new orders and new export orders, showed a marked decline, and new export orders fell to a year-low level. Meanwhile, production remained on an upward trend, and finished product inventory returned to the expansion territory for the first time in five months.
With production expanding, and export orders signaling a slowing growth of demand, China Steel Logistics Professional Committee (CSLPC), compiler of the PMI survey, noted a rise in the inventory backlog and commented on a gradual re-emergence of oversupply in the Chinese steel industry.
China’s steel exports plunged to their lowest level in three years in February, as a total of 5.75 million tonnes of steel were shipped overseas during the month, down by 29% year-on-year, according to the General Administration of Customs. The country exported 13.17 million tonnes of steel in the first two months of 2017, 25.7% lower than a year ago.
China’s authorities reiterated their commitment to cut overcapacity in the steel industry. The country will reduce its steel production capacity by around 50 million tonnes this year, after having eliminating 65 million tonnes of capacity in 2016, Premier Li Keqiang said in a government report at the National People’s Congress in March.