China's production, power outages pave the way for billet imports

This report is part of the S&P Global Platts Metals Trade Review series in which we review datasets and summarize some of the key trends in iron ore, alumina, steel and scrap and metallurgical coal. It also explores what the next few months may bring, from supply and demand shifts to new arbitrage and quality spillovers.

Expectations for steel billets to enter China may continue to rise in Q4, supported by government-mandated cuts in crude steel production and energy consumption, while at the same time and for the same reasons, there will likely be imported shortages of recycled steel.

Against this backdrop of production and power cuts, however, Chinese billet demand will also be tempered by the trend of iron ore prices, but in the case of recycled steel, high scrap prices overseas will force Chinese sellers to look their own way.

S&P Global Platts observed 142 spot CFR Chinese billet deals, offers, offers and benchmark price points in July. Billet became a more attractive alternative as clear signs emerged of the extent to which steelmakers had to cut their output in various provinces.

It is worth noting that most of China's billet imports are sold through traders to non-integrated rolling mills in the eastern province of Jiangsu, where prices are more economically attractive than buying locally. Therefore, the integrated steelmakers did not make a big move to replace their lost crude steel production by importing billet.