Sharp billet price decline occurs due to pressure on exports

Friday, 23 June 2006 17:11:31 (GMT+3)   |  
       

SteelOrbis Shanghai Because of the massive decline in demand in Southeast Asia, Chinese billet exports were suppressed and the prices saw sharp decreases with poor commercial activity this week. Due to scarce number of export inquiries and relatively lower prices quoted for billets imports compared to last week in Southeast Asia, the exports of Chinese semis producers went under a pressure, which resulted in the sharp price decrease for domestic markets. While trying to fulfill the export orders received earlier, steel mills in Tangshan lost many domestic customers. Now, the exports are being suppressed, the number of new export orders have reduced and the mills are in panic. However, the current price decline is very sharp and an upward adjustment is expected in the short term. In addition to the pressure from exports, especially the decline in domestic long product prices was also influential in the declining price of billets. However, due to the brisk demand for slab in international market, domestic slab prices continued increasing considerably. Additionally, domestic flat rolled steel prices are still at a relatively high level, strongly supporting the slab prices. At present, the slab quotation of domestic steel mills is at $455-480/mt FOB. Now, the prices of finished products in general have begun to decrease in local Chinese markets. Nevertheless, except for narrow strip steel, the prices of other flat products are still at a high price level, which will prevent a sharp decline for slabs. It is also believed that there is not much space for billet prices to fall. Therefore, Chinese semis prices are expected to remain steady in general, with minor fluctuations.

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