Chinese billet mills reluctant to quote at present

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.