Recently, the US dollar continued to strengthen, the central parity rate of the renminbi against the US dollar today at 7.0298, adjusted to fall 378 basis points. So far this year, the central parity rate of the yuan against the dollar has fallen 10.26%.

Mysteel understands that due to the weakening of the renminbi, most large Chinese steel mills will cut the steel export price in recent days. The mainstream SS400 hot volume export price is about $565 / ton FOB. The Vietnamese currency, however, also weakened against the dollar, which rose 0.1% to 23,735 today, its strongest level since 1993. Although Chinese merchants voluntarily cut steel export prices, the weakening dong also reduced the counteroffer prices of Vietnamese buyers, with some hot volume counteroffers as low as US $560 / ton CFR Vietnam, which is about US $545 / ton FOB China. In the near term, price volatility ahead of China's National Day holiday is limited and export prices are mainly influenced by the exchange rate, according to a large overseas steel mill who told Mysteel. However, Chinese steel mills are more active in production, and an important meeting will be held in Beijing in late October after the holiday, which will increase the uncertainty of steel demand, and the risk of further decline of steel prices is high.

It is also worth noting that the current sea freight continues to fall, down about 30% compared with the first half of the year. The cost of shipping a 40-foot container from China to the West Coast is now about $4,800, down more than 60 per cent from January. According to Mysteel analysis, the direct cause of the decline in sea freight is the unsaturated international trade orders, and the root cause is the shrinking demand caused by the global wide range of interest rates. In addition, with Europe facing hefty energy bills as winter sets in, largely limiting consumption of other goods, overseas steel demand may continue to lose momentum.