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China's semi-finished steel imports seen rising in Sep-Dec: sources


Power rationing hits long steel markets

Tight supply to continue in Oct-Nov

August imports up 7.4% on month

China's semi-finished steel imports are likely to rise further during September-December after rebounding in August, as ongoing power rationing in the country is seen impacting the domestic long steel market, sources told S&P Global Platts Sept. 29.

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China's long steel production is currently seen more impacted than flat steel, as widening power curbs have mostly affected long steel mills, which are either electric arc furnace or small integrated steel mills.

These affected mills are mostly spread across 12 provinces and regions in China.

Meanwhile on the downstream side, the impact of power shortages on the construction sector is seen limited. The construction sector is the main consumer of long steel.

The power crisis in China has worsened recently, mostly owing to coal-generated electricity supply shortages and tightening energy targets.

Some sources expected the temporary undersupply situation in China's long steel market to continue at least through October and November.

From December and beyond, markets would remain cautious about the supply trend, as construction activity will slow down due to cold weather, but at the same time, steel production is expected to rebound after mills complete their output cut requirements for 2021.

Order situation

As domestic long steel prices rose in September, this further boosted import orders for billet, shipments of which will be mainly delivered in November and December, some traders said.

The Chinese domestic rebar prices rose 11% from the start of September to Yuan 5,815/mt ($900/mt) on Sept. 29, according to Platts data.

Steel prices were mostly aided by the output cuts that first started in July and gradually progressed to other key steel regions across China, a move seen as part of broader plans of China's carbon goals.

At first, steel mills were asked to keep their 2021 output below 2020 levels under the output cut program. But in September, mills widened their output cuts amid growing calls over meeting energy consumption targets and power rationing.

Click here for our full coverage on China's power crisis

August imports

China imported 1.123 million mt of semi-finished steel in August, up 7.4% on the month after falling 19.7% in July from June levels, China's customs data showed Sept. 29.

August imports were 65.1% lower on the year, mainly due to a high base in the second half of 2020, when the Chinese domestic steel demand largely recovered, but overseas markets were still facing lockdown or were in a recovery phase from the impact of the COVID-19 pandemic.

Over January-August, semi-finished steel imports were down 30.2% on the year, to 7.937 million mt. When combined with finished steel imports, China's total steel imports in the first eight months of 2021 were down 26.2% on the year to 17.397 million mt.

Over January- August, China's net exports of finished and semi-finished steel reached 30.71 million mt, up by 136% on the year. The jump in net exports on a yearly basis was mainly because China was net steel importer over June-August in 2020.