Low-priced Chinese hot rolled coil has returned to Vietnam this week. These are most likely cargoes which will be exported without full payment of China’s 13% VAT, because other offers for Chinese HRC are higher-priced, trading sources tell Kallanish.

VAT-evading (non-VAT) steel exports, particularly for wire rod, are offered in ASEAN at more competitive prices than VAT-paid material.

Non-VAT offers for commercial quality HRC are at up to $10/tonne below market levels. A trader in Hanoi says he saw Q195 offers at $535-538/t cfr on Wednesday morning. Offers last Friday were at around $548/t cfr Vietnam.

Another trader received an offer for Q235B grade HRC at $540/t Vietnam for July shipment. "I think that this lower price is from non-VAT sources,” a trader in Ho Chi Minh City says. He notes there are many offers at higher prices of around $547-550/t cfr.

An offer for narrow 730mm and up width, 3mm thickness Q195 grade HRC was seen at $528/t cfr Vietnam. A buyer in southern Vietnam was heard to have booked on Tuesday 10,000-15,000 tonnes after negotiating down the offer to $525/t cfr, a trader reports. He hears bids are prevailing at $538/t cfr for non-VAT Q235 HRC.

Rerolling-grade 50% 2mm thickness, 50% 2.3-3mm thickness, SAE 1006 HRC is offered at $555/t cfr Vietnam, together with the narrow-width Q195 HRC. However, this offer price is similar to offers for VAT-compliant SAE 1006 HRC from Tier II mills.

Suppliers withdrew from offering non-VAT steel at end-April amid reports that the Chinese government would be cracking down on such steel exports. Some Chinese observers say the inspections on steel exports were done at the domestic level without the involvement of Chinese Customs. With no clear official action being taken, some exporters are now willing to take the risk again, Chinese market sources say.