Coronavirus to boost China’s steel billet imports and reduce exports

SHANGHAI, Apr 2 (SMM) – With measures to contain the fast-spreading coronavirus pandemic slowing business activity outside China and jeopardising demand for steel, steel billet prices in some countries are seeing sizable discounts against Chinese prices, boosting flows to China.

Southeast Asian billet is currently offered at $405-410/mt, tax included, in China, while resources from producers in Jiangsu, East China, will cost about $462/mt. That creates a price gap of nearly 300 yuan/mt. Billet from Russia is around $35/mt cheaper than those from Southeast Asia in terms of FOB prices.  

SMM learned there have been imports of billet from Russia and Indonesia.

Chart 1: FOB prices of steel billet from Southeast Asia and the Commonwealth of Independent States (CIS)

Data showed that China imported 1.2 million mt of steel billet in the first two months of 2020, up 1.04 million mt from the same period the year before.

China’s billet imports swelled late last year, as spot rebar prices in the country reached a one-year peak in November. Imports in December stood at 863,800 mt, up from 174,700 mt in October.

Chart 2, 3: China’s imports of steel billet

Source: SMM, China customs

Further increase in steel billet exports to China is expected in the near term, as price gap widens and demand is more fragile outside China amid the pandemic outbreak.

China’s exports of steel billet, meanwhile, are set to take a hit. But the impact is expected to be limited, as the overall export volume is small.

China’s steel billet exports totalled 68,900 mt last year, the highest since 2011, while dropped 58.68% year on year in the first two months of this year due to the virus outbreak in China and the Lunar New Year holiday.

Greater net imports, growing supply from electric arc furnace (EAF) steel mills and shifts from flat steel as well as high social inventories are expected to keep spot rebar prices in China weak in the short term.