China to receive over 3 MnT of Imported Billets and Slabs in Apr-Jun’20

With the gradual recovery of China’s economy after the containment of covid19, the steel consumption in the downward stream has been on the rise. After the mid-term of March, the inventory of both inside mills and on the market started to drawdown. For example, as per the statistics with CISA, the social inventory of five major steel products by end of March was 19.06 MnT, a drop of 940,000 MT, or 4.7% from level of mid-March. By the end of 10^th April, the social inventory came down to 18.03 MnT, down 5.4% from the end of March. On the 20^th, the social inventory fell to 17.17 MnT, down 4.8% from 10 days ago.

On the other side, the continuously spreading of covid19 in oversea markets has prompted many countries to impose lockdown and restrictive measures in various industry sectors. The automobile as one of the major steel-consuming industries is amongst the hardest hit and many carmakers both in Europe and Asia were thrown into a tough situation leading to significant output cut or shutdown and curtailed demand on steel.

The reduced output of steel amongst oversea steel mills has also pushed down the price of steel scrap which in turn will lower the steel costs. Even there is a limit for scrap import to China, the billet import at low costs will still bring impact to China’s steel price.

While the inventory in China showed a steady decline, the billet price has been sticking to the rock bottom line of RMB 3,000/MT. From Feb 03 to April 24, the average price of billet in Tangshan is RMB 3,113.78/MT and during March the average price of it was RMB 3,082.55/MT ex-mill, tax inclusive. Some traders in the meantime also actively explored the oversea markets for more cost-effective resources amid scaled down operations amongst steel mills worldwide on account of raging epidemics, which delivers severe blow on market demand and pressure on the stock going.

Billet import in 2019 has been active. For example, in Jul 2019 the billet import to China was 160,271 MT, up 206.66% Y-o-Y; and in Aug the figure was 191,021 MT, up 269.49% Y-o-Y; in September the import amounted to 295,470 MT, notching a Y-o-Y increase of 417.94%;

It is also heard that some traders turned the scraps into billets and exported to China. According to relevant data, there will be over 3millon tons of slabs and billets to arrive in China during April-Jun 2020, or 4-5 MnT of steel products if put other categories such as HRC, plates, wire rods, pig iron, etc. However, this amount compared with China’s monthly consumption will have limited effects on the market trend given that the inventory is still relatively high compared with the level of previous years.

Expected country-wise billet imports to China

Link to complete list of expected semis and flat steel imports to China