Exports provide support for Chinese semis market

Thursday, 29 March 2007 10:11:37 (GMT+3)   |  
       

SteelOrbis Shanghai

Although the flat finished steel market has suppressed China's semis prices, the strong international demand is providing support for the market. Therefore, the Chinese semi finished steel prices have maintained an overall stability over the past several weeks.

On March 28, the price of common carbon billet in Tangshan, Hebei Province was constant at RMB 2,970/mt ($384/mt), while that of 20MnSi was up by RMB 30/mt ($4/mt) to RMB 3,050/mt ($395/mt). Meanwhile, the ex-factory price of slab from Laiwu Steel remained unchanged at RMB 3,100/mt ($401/mt).

Last week, overall demand seemed quite flat in the Chinese semi finished steel market, with the trading volume at normal levels. Affected by the bad performance in the finished steel market, most rolling mills just stood aside, making no purchases at all. Uncertain about the future trend, these mills were unwilling to purchase semis at the present price level. Meanwhile, the semis producers are already fully booked for the short run and so have not lowered their prices for future orders. Consequently, there was a lack of trading activity in the semis market.

The strong confidence of semis producers comes from the high level of export inquiries. By now, many mills in various regions have received a great deal of export inquiries. However, since the buyers and sellers have diverged on the quotations, the trading volume is not big at the current stage. These mills believe that the Southeast Asian mills are not able to get cheaper semis from any other place except China, so they are not worried about the prices.

In addition, due to the sluggish finished steel prices and the high semis prices, some rolling mills stopped production when they ran out of stocks. Others ceased their production of finished steel and began to sell billets instead..

Generally speaking, the Chinese billet prices are expected to remain stable in the near future, while slab prices are likely to see a slight increase.

The latest data on semis imports and exports issued by the relevant Chinese authorities for February show that China's semis exports totaled 544,000 mt for the month in question, down 25,000 mt or 4.4 percent month on month, a year-on-year increase of 244,000 mt or 87.9 percent. Broken down into the various products, common carbon billet exports totaled 199,000 mt, down 10 percent month on month and up 98 percent year on year. Meanwhile, common carbon slab exports totaled 242,000 mt, down six percent month on month and up 142 percent year on year.

China's major billet export destinations in February were: Vietnam with 46,900 mt, down 36 percent year on year; Thailand with 31,549 mt, up 215 percent; Kuwait with 24,735 mt, no statistics last year; South Korea with 21,097 mt, up 72 percent; and Saudi Arabia with 20,787 mt, no statistics last year.

The major billet export destinations for the January-February period were: Vietnam with 138,469 mt, down 11.7 percent year on year; Thailand with 92,433 mt, up 149.2 percent; Kuwait with 44,753 mt, no statistics last year; South Korea with 37,082 mt, up 104.2 percent; and Taiwan with 34,325 mt, up 573 percent on last year.

Meanwhile, China's major billet import source is Japan with 9,544 mt, down 37.7 percent year on year. Imports for the Jan-Feb period were 18,042 mt, down nine percent.

Compared with the previous month, Saudi Arabia became the fifth destination for Chinese billet exports, taking the place of Taiwan. Moreover, while Oman did not import any billet from China in January, its imports from China jumped to 19,587 mt in February, just behind Saudi Arabia. The strong demand in the Middle East market leads to large quantities of Chinese billet exports to this region.

China's major slab export destinations in February were: Taiwan with 112,494 mt, up 922.2 percent year on year; Malaysia with 45,369 mt, up 222.3 percent; Indonesia with 36,258 mt, up 157.6 percent; and South Korea with 28,442 mt, up 43.6 percent on last year.

The major slab export destinations in the January-February period were: South Korea with 138,706 mt, up 240 percent year on year; Taiwan with 118,664 mt, up 573 percent; Malaysia with 77,560 mt, up 175.3 percent; Indonesia with 57,888 mt, up 2.2 percent; and Vietnam with 39,858 mt, up 209.7 percent on last year.

Meanwhile, China's major slab import source in January was South Korea with 7,071 mt, no imports the same period last year. Imports for the Jan-Feb period amounted to 12,104 mt, up 147.2 percent year on year.

Due to the strong domestic demand in the CIS countries, export quotations for CIS slab have seen successive increases since the end of 2006. As a result, the Taiwan mills cannot afford such a high price level and have started to import from mainland China. Overall, Southeast Asia is still the major destination for China's slab exports.

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