China Books 40,000 MT Billet from India- Sources

China has elevated its interest towards billet imports. Inkling is the recent billet deal which the country has concluded from India and Iran. If sources to be believed, 40,000 MT billets from a private mill of India is reported to have booked by China at USD 400-405/MT, CFR China.

Earlier this week, two deals were reported to conclude from Iran to China; 45,000 MT at USD 395/MT, CFR and 200,000 MT at 385/MT, CFR China. Both the shipments are scheduled for end Oct'19.

SteelMint scrutinized the country's interest towards India for billet imports and learnt; the prime reason is the freight increase from Iran. The freight from Iran to China has increased to USD 40 from USD 30. Also, the Iranian Government has put restrictions on export tonnage of semi-finished steel which has turned the China towards India for billet imports.

Pricey domestic billets are driving the imports in China- According to SteelMint, the reason for country's shifted interest towards billet imports is prudency. Below is the SteelMint Analysis on the same.

This month, till 25 Sep'19, Chinese domestic billet prices continue to trade at price levels of RMB 3300-3400/MT, which is equivalent to USD 463-477. Landed cost of imported cargo would be less.

Looking at the current deal; assuming deal value to be USD 404/MT.
(USD 404 x currency rate 7.1 x 1.02 import tax x 1.13 VAT) + RMB 35 (logistic cost) = RMB 3,341

Today, on 25 Sep'19 it is RMB 3,340 in Tangshan and Eastern China is always RMB100 higher than Northern China; assumption. Which makes it RMB 3,440. If sources to be believed, the deal is concluded for Eastern China.

Also, currently there are 30 blast furnaces in Tangshan which have implemented shutdown with a volume of 28,754 MT affecting daily hot metal output of 160,000 MT. Blast furnace utilization rate will further fall as mills are working on production limit measures.October national holidays starting from 1st Oct'19 amid tightening supply at the ports.
Also, few traders are also exploring possibility of billet exports from India to China.