This week, low-priced Chinese hot rolled coils have returned to the Vietnamese market. According to trade sources, these coils are likely from shipments where the 17% VAT in China has not been paid. This explains why other offers for Chinese hot rolled coils are priced higher.
VAT-free steel exports, particularly in the production of wire rods, offer a significant price advantage over VAT-paid materials in the ASEAN region. For commercial grade hot rolled coils, VAT-free offers are around 10 USD/ton below market prices.
A trader in Hanoi reported receiving offers for Q195 grade hot rolled coils at 535-538 USD/ton cfr on Wednesday morning. Last Friday, offers were around 548 USD/ton cfr in Vietnam.
Another trader received an offer for Q235B grade hot rolled coils at 540 USD/ton cfr for July shipment. A trader in Ho Chi Minh City mentioned that these low prices likely come from VAT-free sources and noted that there are many higher-priced offers around 547-550 USD/ton cfr.
Suppliers withdrew from offering VAT-free steel at the end of April following reports that the Chinese government would pressure against such exports.
Some Chinese observers state that inspections related to steel exports are conducted locally without the involvement of Chinese Customs. Chinese market sources indicate that due to the lack of clear official measures, some exporters are now willing to take risks again.
The return of low-priced Chinese hot rolled coils to the Vietnamese market could increase competition in the steel sector and lead to lower prices. However, the Chinese government's stance on such exports remains uncertain, posing a risk to prices.
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