China's addiction to imported semi-finished products is cooling

China's imports of semi-finished steel products have recently declined due to the recent sharp drop in domestic steel prices amid sluggish domestic demand.

Q235 150mm square billet price in Tangshan, North China has been steadily declining by a total of RMB 430 per tonne ($ 67.2 per tonne) from its recent peak on October 11 to RMB 4,900 per tonne EXW, including 13% VAT on evaluation by Mysteel.

Moreover, the market price of the same grade harvest in East China's Jiangsu province, also assessed by Mysteel, dropped by a higher 560 yuan per tonne from October 11 high to 4,820 yuan per tonne, including 13% VAT. Hebei and Jiangsu are China's two largest steel producing provinces.

“Prices were falling too fast. These days we cannot sell imported semi-finished products anywhere, ”grumbled a steel importer from East China.

Instead of looking for more import opportunities, he said, Chinese traders are struggling to move the semi-finished products booked - but not yet shipped - to countries other than China.

East China is a key destination for imported semi-finished products, as many large steel trading companies are based here and the region is also a major center for semi-finished goods consumption.

A second steel trader with a trading house in eastern China's Zhejiang province also noted a recent weakening in import and trade activity. “Sales of billets are stagnating here, (so) all we can do is wait for the opportunity,” he said.

The downturn in trade in East China is mainly due to the suspension of rewinding machines in Jiangsu, as the provincial government has rationed electricity supplies to industrial plants since mid-September.

Meanwhile, in the Tangshan region, a ban was imposed on the production of local rolling mills between October 21 and 31, according to Mysteel Global.

Market watcher from Shanghai observes that instead of focusing on East China, overseas sellers prefer to make offers to North China, where prices are higher. “But even though sellers have lowered their offers following the fall in prices in China, they tend to be 200 yuan per tonne higher than domestic prices in China,” she said.

According to Mysteel tracking, bids for 5SP 150mm square billet from ASEAN as of October 27 were priced at $ 715 per tonne CFR East China, down $ 3 per tonne per day or $ 15 per tonne since Oct 11.

In January-September, imports of steel semi-finished products to China were generally active and amounted to 9.4 million tons, although in nine months they decreased by 33.9% compared to the same period last year. This was mainly due to the high base of 2020, when China became the dominant buyer of the global steel market. The country's economy has previously reportedly recovered from the devastating impact of COVID-19.