Since July, billet imports have increased in Eastern China which has impacted domestic trade in the region. The billet ex-factory price in Xuzhou has dropped from RMB 3,780/MT to RMB 3,510/MT, registering a drop of RMB 270/MT. The reasons for the decline are as follows:
1.The Xuzhou waterway is blocked and the transportation period is extended.
2.The demand for rebar remains sluggish and the profit of billet rolling mills is upside down with tapering interests for billets.
3.Some long-route steel mills take the initiative to overhaul the rebar rolling line thus increased the amount of saleable billet.
4.Imported billets arrived gradually, building pressure on local resources.
It is learnt that imported billets are mainly from Iran, Qatar and Azerbaijan. In July, the amount arrived was about 200,000 MT, including about 130,000 MT of slabs and about 70,000 MT of square billets.
In August, it is estimated that the monthly arrival will be more than 200,000 MT, with billet and slab accounting for half respectively. It is hunched that some shipments are yet to schedule and could arrive in the coming time. The pricing model is about RMB 300/MT off from the rebar main futures contract price during the quotation period.
At present, orders from July to September have been locked by the local manufacturers. Affected by the fluctuation of the exchange rate, the current cost of imported steel billets from Iran is about RMB 3,590/MT, which is costlier than prevailing domestic offers in China.
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