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November 22, 2021 – Use the off-season now for strategic stainless steel purchasing ahead of the Chinese Luna New Year 2022 (LNY 2022). Opportunities in the Asian market are great. Freight costs likely to rise again soon. Base metals started Monday on a positive note. Stainless steel futures up. HRC and Rebar demand up 4.2%. Sources report possible new Chinese export tax on steel products.

Stainless Espresso: Use off-season before LNY 2022 for stainless steel sourcing
Stainless Espresso: Use off-season before LNY 2022 for stainless steel sourcing

Stainless steel: Use off-season before LNY 2022 for sourcing

There are currently some attractive opportunities in the Asian stainless steel market to start sourcing for 2022. This is particularly the case as consistently high stainless steel prices and the outlook for continued shortages are being reported from Europe and the United States.

Save freight costs before LNY 2022

The outlook for container premiums in the Trans-Pacific all-inclusive rates segment also currently points to a further increase in demand from the United States. Logistics costs are therefore likely to rise again significantly in the run-up to the Chinese LNY 2022 festival. Now is the time to act.

Base Metals started Monday on a positive note

Base Metals started the week on a largely positive note on Monday. Nickel is up 2.65% on the SHFE. For aluminium, up 1.81%. For nickel, the current inventory is low. There is also the possibility that the premium will continue to rise in the future. For aluminium, billet prices are showing stability right now and the accident at a large Chinese aluminium plant in Yunnan is driving concerns about undersupply. In addition, China’s October 2021 average aluminium production has fallen to its lowest level in a year.

The European LME is also positive. Nickel is holding above $20,000 per tonne. And aluminium is already up by just under one percent.

Stainless steel futures and HRC prices rise

Chinese stainless steel futures (+1.2%) rose today, and HRC and Rebar prices also jumped more than 4.5% in the interim on Monday.
Since the beginning of November, demand for HRC, rebar, wire rod and others has increased by over 4.2%.

Is a new export tax on Chinese steel exports on the way?

According to market sources, there is concern in China that an export tax may be imposed on steel products after export rebates have already been eliminated this year. Even though Chinese steel exports continued to fall in October 2021, they are still over 11% year-on-year.

High steel exports could alarm Chinese government

Looking at the recently released statement by Ambassador Zhang Ming on the EU-US Steel and Aluminum Deal, China has already cut 150 million tonnes of crude steel production between 2016 and 2020. And Chinese exports of steel and aluminium during this period amounted to only about 5 to 8% of total domestic production. EU steel producers exported an average of 13% of their total production to European countries in the comparable period 2016 to 2020.

According to market participants, too high an export share for steel could therefore lead to the Chinese state intervening promptly and imposing an additional tax on exports to keep products in the country.

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