Chinese billet exports eye domestic price decline

SteelOrbis Shanghai The most important factor preventing a drop in domestic semi-finished steel prices of China seems the strong international market. Currently, the semi-finished steel supplies from the CIS countries are able to meet the demand from Middle East and Europe, but the amount of supplies from the CIS to other regions such as Southeast Asia is little. Chinese export prices for billets are higher than CIS prices due to high domestic semis prices, which hampers the exports. The export volume may pick up when domestic prices decrease to a certain degree. The proximity to other Southeast Asian countries is an advantage for China in terms of billet exports; nevertheless, an increase in Russia's billet exports to Southeast Asia from its eastern ports may threat Chinese billet exports. Although the severe conditions of winter are over, international semi-finished steel prices are continuing to increase thanks to the reviving demand. Meanwhile, overall steel prices in Chinese domestic markets have began to fall slightly, which has suppressed rolling mills' activity in placing billet and slab orders. Chinese mills consume common carbon billets for rolling wire rod and low alloy billets for rolling rebars in general. Common carbon billet prices and the transaction volume slightly went down compared with the previous week. Low alloy billet prices remain strong as the mills have increased their rebar rolling activities. Last week, slab prices remained unchanged too. At the beginning of last week, semis prices kept climbing in Tangshan region –the major market of North China- and Jinxi Steel raised the ex-factory prices of common carbon billets to RMB 2,800/mt ($349). As the increase in finished steel prices ceased, most rolling mills have cut their follow-up orders in the latter part of the week and are now waiting to see what is going to happen next. The prevailing market prices went back to the level of a week ago. In Northeast China, prices increased and reached to the levels in North China. Semi-finished steel prices are currently stable in local markets but they are expected to decline slightly in the short run.