New data from China’s General Administration of Customs showed that the country imported 18.3 million tonnes of semi-finished steel items in 2020, five times higher than in 2019 and hitting a record high since 2006 when Mysteel started to archive the Customs data. Semi-finished steel imports reached record levels last year as domestic prices were much higher than international prices, especially over May-August, analysts explained.
The surge in semis was in line with the 64.4% on-year increase in finished steel imports, Mysteel Global notes. The robust recovery in domestic demand following the retreat of the COVID-19 virus – against the demand suspension in overseas markets due to the pandemic – created huge gaps in steel prices rarely seen.
For example, Mysteel’s data shows that the Q235 150mm square billet price in Tangshan in North China’s Hebei province, as assessed by Mysteel, stood higher than the CFR price of imported Southeast Asian billet for most of 2020, with the difference yawning as high as Yuan 499/tonne ($77.1/t) on May 29 last year. In contrast, over 2018 through until around September 2019, global prices of billets were higher by Yuan 100-500/t than domestic prices, according to Mysteel’s data.
Contributing to the widening China-international price gap in 2020 was the closure of some steel mills supplying billets in North China’s Tianjin municipality and in East China’s Xuzhou city. Their shutdown intensified the domestic supply shortage and driving home-market prices higher, as Mysteel Global had reported.
Due to the high volume of semis imports, China became a net steel importer for several months in 2020 – over June-September and in November – a phenomenon not seen for over a decade. Though China remained a net steel exporter for the whole of 2020, the volume last year decreased to 15.1 million tonnes, down sharply from 50 million tonnes in 2019.
“The robustness of actual domestic demand for steel generally in China last year was beyond expectations – especially in June-September – when domestic output was rising and steel imports were increasing markedly but steel inventories kept shrinking,” a Shanghai-based analyst remarked.
“Nevertheless, the supply-demand relationship has now changed, with import volumes down and exports up,” he added. “Unfortunately, steel inventories continue to pile up.”
Notably, the price gap between Chinese billet and overseas billet closed in December. As of January 15, the Tangshan billet price stood at Yuan 3,830/t including the VAT while the CFR price of billet imported from Southeast Asia was at $605/t, which is translates to around Yuan 4,423/t if the VAT is added.
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