Chinese billet prices declining with rebound in slab

SteelOrbis Shanghai Influenced by the reduced demand from abroad, Chinese billet prices saw a continuous decrease recently. At the same time, however, slab prices rose under pressure from hot-rolled coil and medium plate. On September 27, the price of common carbon billet in Tangshan, Hebei Province, decreased RMB 60/mt ($8) week on week to RMB 2,800/mt ($354), that of 20MnSi decreased RMB 20/mt ($3) to RMB 2,900/mt ($367). The ex-factory price of slab from Laiwu Steel was up RMB 50/mt ($6) to RMB 2,950/mt ($373). As regards billet, sources report that the large quantities purchased in July and August by rolling mills in South Korea are sufficient to meet their production demand until November. Thus, inquiries from South Korea are down significantly these days. Moreover, after the increase in Chinese billet prices, the CFR price of billet to South Korea is almost the same as the CFR price of rebar. As a result, the Korean rolling mills cannot afford such a big cost pressure and have become very cautious regarding purchases. Meanwhile, the earlier rapid rise in the domestic steel market has curbed demand among end users to a certain extent. In recent days, prices of steel strip, wire rod and other finished steel products declined. In this situation, if the rolling mills make purchases according to the current billet prices, they will not be able to make any profit. Therefore, most of the market players are standing aside, causing a shrinkage in the trading volume. Nevertheless, the recent decline in billet prices can be regarded as just a temporary backdown during an upward trend. Steel strip and other finished steel product prices are expected to continue increasing in the fourth quarter, which may also push up billet prices further. As regards slab, prices eventually started to climb after nearly two months of stability. Some market insiders indicated that the slab supply seems to be going up with the improvement in commercial activity. In such a situation, the increased slab prices reflect the rising demand for slab and for flat steel products as well. At the same time, some steel mills such as Anyang Steel, and Handan Steel will begin production on their new rolling mills by the end of this year, thus leading to a shrunk slab supply. It is estimated that slab prices will move steadily up in the short term.