China buys time for steel imports amid global pandemic restrictions

China has been in the rare position of an active steel buyer in the spot market since mid-March, when the country is experiencing its worst coronavirus outbreak, just as major buyers of its steel exports are facing what has become a global pandemic.

In its cautious return to business as usual, the recent surge in steel purchases in China - including shipments diverted from original buyers who could no longer take delivery - could support the market in the second quarter, buying time for the rest of Asia to flatten the curve at the hotbed.

China bought billet and hot rolled coil from the spot market - materials it is known to have exported - as internal construction resumed, and conversely, demand in other parts of the region plummeted due to blockages and other measures to stem the spread virus.
China sighed with billet purchases last December and only resumed purchases on March 10, spot market data compiled by S&P Global Platts showed. It was then, according to the Ministry of Housing, that work on 58% of construction sites in China resumed after measures to restrict the use of coronavirus were relaxed.

As of April 1, construction activity in China recovered to above 85%, suggesting that imports may be maintained in the second quarter. In the first 10 days of April, Platts tracked two more CFR deals for Chinese billets worth 50,000 tonnes.

The purchased billets are expected to arrive in the second quarter and will be offloaded primarily to Jianyin Port in eastern Jiangsu province for processing into structural steel such as rebar and wire rod. According to market participants, it is likely to replace the billet used domestically from northern Jiangsu and Tangshan in Hebei province.

Some were also likely diverted from their original destinations in Southeast Asia, such as the Philippines, where Luzon rollers closed due to blockages and had to ask for dispatch delays.

The rapid rebound in demand from China's construction sector has made domestic rebar prices and margins more resilient than HRC, whose fortunes are more closely linked to the manufacturing sector.