Chinese semi-finished steel imports increased to a new record high in July as Chinese steel prices remained higher than other markets. Chinese purchasers were preparing for a period of restricted capacity during the October holiday, but with changes in exchange rates and domestic prices, importers with material still on the seas may be caught out, Kallanish notes.

July semis imports reached 244,407 tonnes, up 127.2% from June and 1,251.5% year-on-year. The previous peak in semis imports was 174,297t in January 2018, but that was driven almost entirely by stainless slab imports from Tsingshan Group’s plant in Indonesia. That trade was largely closed down by an anti-dumping duty investigation started in 2018. In July, however, Indonesian stainless slab was back, with China suddenly importing 17,892t compared to none in June.

Carbon steel semis imports began to pick up earlier this year and especially since May. Initially this was driven by aggressive and cost-competitive new investments in Malaysia, and in July, Malaysia still accounted for around 25% of semis imports to China with 61,818t.

While billet imports drove much of the growth up to June, slab imports also surged in July. Carbon steel slab imports jumped 108.3% month-on-month and from zero a year earlier to 120,411t.

As global steel markets have slumped, however, while the Chinese market remained firm until recently, Middle Eastern and Vietnamese semis also became competitive. These shipments started arriving in June, and in July shipments from Qatar and Oman combined grew to 87,374t, or almost 36% of China’s semis imports. Imports from Vietnam were 36,336t in July, 15% of the market.

Traders looking at the trade tell Kallanish much of the Middle Eastern billet is in fact Iranian, but that financing is only possible after trans-shipment in other countries. Iran’s steel industry is under pressure from restrictions on its exports and the use of US dollars, but is also profitable at low prices because of captive iron ore and natural gas supply.

Deals for billet booked in July were heard at up to $450/tonne cfr China. Since the end of July, however, billet prices have slumped CNY 320/t, touching CNY 3,290/t on 27 August. At the same time, the CNY has sunk to an 11-year low against the dollar of around CNY 7.15/dollar. In dollar terms, Tangshan billet has slumped from just over $530/t to just under $460.43/t ex-works. That includes 13% VAT as well as the advantages of lead time, lower transportation time and the ability to book smaller shipments.

August data is expected to show another increase in arrivals based on several hundred thousand tonnes of bookings over June-July. With markets both volatile and weak, however, semis import volumes are likely to fade in the coming months.