SteelOrbis Shanghai
Billet importers from Vietnam have been seeking of late to make purchases of Q275
billet. After enquiring at several Chinese
billet mills, the Vietnamese buyers failed to receive any satisfactory response.
The Chinese
billet mills indicated that Q275
billet is not the main product which they manufacture. They added that unless there are firm orders they will not make preparations for the
production of this item.
The Chinese domestic
billet price is low at the moment. The ex-works price for Q235
billet is about USD348-351/mt, while the export quotation is about USD410-415/MT. Since the Chinese government levies a 10 percent export tax on
billet, the
billet mills have a low margin and so have no great incentive to expand
production. Though domestic demand is weak, the current
production orders are sufficient to keep factory
production ticking over.
Billet stocks are also low.
Moreover, though the Chinese government issued a new tax policy for
billet exports, it failed to curb
billet exports effectively. In Nov.2006, the total export volume for billets reached 1.48 million mt - the highest monthly level since 2005. Recently, there have been rumors that the Chinese government is to issue a new export tax policy in another attempt to achieve a reduction in
billet exports. If the Chinese government increases the export tax rate, the exporters will end up incurring losses and so some of them are reluctant to quote. Some
billet mills have said that they will export to Vietnam if the Vietnamese importers accept a higher price.
A Vietnamese source has told SteelOrbis that they currently rely on Chinese billets. The source also added that they are keeping an eye out for any change in the Chinese policy on
billet exports.