China's billet imports increase 28% in Jan-Apr'21 on high domestic prices

China, the world's largest steel producer, registered billet imports of 2.72 million tonnes (mn t) in the first four months of CY'21 (Jan-Apr'21), higher by 28% year-on-year compared to 2.13 mn t in Jan-Apr'20, the data maintained with SteelMint shows.

Firm demand for imported billets for the past few months amidst higher Chinese domestic prices resulted in an increase in imports.

The highest volume of billets came from the ASEAN countries, mainly Vietnam, Indonesia and Malaysia as they have been enjoying zero import duty in China.

Imports of the material in Apr'21 stood at 750,547 tonnes (t), a sharp rise of 80% y-o-y compared to 436,464 in Apr'20. On a monthly basis, imports registered 30% increase against 615,232 t in Mar'21.

Vietnam, Iran retain top exporters' spot

Vietnam and Iran continued to be the largest exporters of billets to China followed by Indonesia in Jan-Apr'21. Imports from Vietnam stood at 865,336 t (up 85% y-o-y) and those from Iran at 430,352 t (up 22% y-o-y). The same from Indonesia were at 357,508 t, a whopping 240% y-o-y increase compared to 104,932 t in Jan-Apr'20. Other major exporters were Oman, Russia, Malaysia, India and Japan.

China's billet imports from India amounted to 175,065 t in Jan-Apr'21, according to SteelMint data. Imports in Jan'21 were recorded at 45,008 t, which decreased by 34% m-o-m in Feb'21. However, the same picked up in Mar-Apr'21 due to strong demand from China amidst production curbs.

Output curbs increase China imports

On 19 Mar'21, the Tangshan local government came up with new restrictions for steel mills in the city, effective from 20 Mar'21 till the end of 2021. As Tangshan is the main billet production and trading hub in China, the local billet market immediately reacted to this news and many mills increased their prices. Supply shortage amidst strong billets demand in China increased the country's dependence on imports.

Chinese mills remained active in booking imported billets in the past few months due to continuous rise in domestic prices. The country's billet prices kept on increasing following an uptrend in global steel prices and bullish steel futures.

As per SteelMint's last assessment, Chinese billet prices stood at RMB 5,010/t ($783/t), ex-Tangshan, including 13% VAT, on 11 Jun'21, up RMB 70/t ($11/t) d-o-d.

Outlook

As China pledges to cut its production capacity this year in an effort to reduce the carbon footprint, the country is focusing more on imports of steel products, including billets. Supply shortage amidst stricter output curbs and soaring prices in the domestic market on strong demand for the material will likely boost the country's imports in the near-run. Furthermore, with China removing the import duty on non-ASEAN-origin billets, exports from this region is likely to pick up in the coming months.