China’s billets imports for June soared 2,237% on year

SHANGHAI, Aug 19 (SMM)—China’s billet imports for June soared 2,237% year on year, and are expected to scale new heights in July.

China has successfully contained the coronavirus pandemic earlier than other countries, with domestic businesses starting to reopen since March. Steel prices at home rallied in April as demand steadied, while prices overseas hovered at low levels as demand shrank amid widespread of Covid-19. An SMM survey showed that import orders surged in April-June as prices of seaborne billets were 30-100 yuan/mt lower than that of domestic billets in Jiangsu and Zhejiang, and it usually takes 20-45 days to ship cargoes to domestic buyers, which explained the surge in billets imports in June and July.

China imported 2.48 million mt of billets in June, soaring 2,237% from a year earlier and rising 194% from May, according the latest customs data. For January-June, billet imports totalled 5.54 million mt, surging 991% from the same period last year.

Imports of finished steel products stood at  2.61 million mt in July, up 209.5% on the year and 38.7% on the month, recording a fresh high since 2016.

Imports of plain billets and common slabs mainly contributed to the surge in billet imports. China imported 1.48 million mt of plain billets in June, increasing more than 136 times year on year, and 715,000 mt of common slabs, rising more than 11 times from a year ago.   

Russian, India, Vietnam, Iran, Indonesia and Malaysia were China’s major billet suppliers. In the first half of 2020, China imported 1.09 million mt of billets from Russia, accounting for 19.6% of the total imports. Russia has long been a top billet supplier to China due to its advantages in billet output, prices and transportation fees.

Jiangsu, Zhejiang, Shanghai and Fujian imported a combined 5.01 million mt of billets in the first six months of 2020, accounting for 90.4% of the total.  

Will large inflow of seaborne billets shake domestic steel market?

Large inflow of imported billets will definitely weigh on prices and further ramp up the already high inventory pressure in east China. On the other hand, imported billets actually only accounted for a small part of total crude steel output even as they soared to a new all-time high. In addition, SMM estimates that billets imports are likely to return to normal levels in the second half of 2020 as the price spread between imported and domestic billets narrowed. Domestic steel prices are expected to maintain its upward trend as demand improves after the wet season ends. 

Although billets imports soared significantly this year, totalling 8.33 million mt in the first seven months of 2020, they only accounted for 1.4% of total crude steel output of 593 million mt produced during the same period, suggesting a limited hit to the supply.

Moreover, price advantages of seaborne billets has gradually weakened since July, and orders have plunged over the past two months. Arrivals of seaborne billets are expected to fall sharply after August, easing the supply pressure.