The enthusiasm of Chinese traders and even some steelmakers for importing steel witnessed during this year’s first half shows no sign of cooling down, due to the continuing disparity in prices between local and foreign steel items in the Chinese market, market sources said Thursday.
“The keenness for importing is still high in China, despite that overseas offers have risen slightly. There is much more information about imports than exports,” a steel trader based in Shanghai told Mysteel Global, predicting that the trend may last for the rest of this year.
“Previously, only India, South Korea and Japan had been offering prices for hot-rolled coils (but) recently even offers from Indonesia and Vietnam have turned up,” she said.
Last week, an order for 100,000-120,000 tonnes of HRC was heard placed by Chinese traders with Vietnam-based Formosa Ha Tinh (Formosa) with the grade and price unknown. On July 16, Formosa offered its SAE 1006 skin pass HRC at $465/t CIF, Mysteel Global understands.
During this year’s January-June half, China’s steel imports increased by a remarkable 26% on year to 7.3 million tonnes, and in June alone, imports surged by 99.9% on year to 1.9 million tonnes. In contrast, China’s steel exports declined 16.5% on year to only 28.7 million tonnes in H1, as Mysteel Global reported.
The import frenzy in China and the reduction in exports are mainly due to the price gap between the Chinese and overseas steel markets, according to an official from a major steel mill in North China. Demand in China is largely back-to-normal while low demand remains abroad.
“Our exports declined even more in H1 – they more or less halved – and occasionally, our international trading company bought from abroad to sell domestically, due to the higher domestic steel prices,” he told Mysteel Global. Some other domestic mills have been importing billets, slabs or HRC for further processing and sale because this lowers the Chinese mills’ overall production costs.
“Though foreign mills such as those in Japan and South Korea have been raising prices, the increases have not been as large as the price hikes in China. The Korean and Japanese mills cannot afford to, considering the continuing weak demand they face in their countries,” the Shanghai trader said.
As of July 22, China’s domestic price for Q235 4.75mm HRC was Yuan 3,917/tonne ($559/t) including the 13% VAT, up Yuan 130/t from the end of June. Meanwhile, HRC prices in South Korea and Japan were only able to grow by around $10/t over the same period, sources indicated.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
Photo: World Steel
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