Chinese common carbon billet price is firm

SteelOrbis Shanghai Chinese semi finished steel market moved stable through last week, with brisk commercial activities on common carbon billet and weak 20MnSi billet trading. Failing to continue the upward trend of the previous week, Chinese billet market did not see any obvious changes over the past week, but the market performances of various kinds of products are different. The market of common carbon billet continued the strong performance. The expansion in purchase by narrow steel strip and section steel producers in Hebei and Shandong resulted in the increase in trading volume. In Guangdong and Guangxi regions, there are many exports to Vietnam and the current deal price is above $368/mt FOB. Thus, semis producers are willing to do exports. However, the market of 20MnSi billet is quite weak. Since rebar prices are still pacing up and down at the low level with poor commercial activity, rolling mills are not active in production, only to maintain the current production. This is also the major reason that caused the continuous decline in rebar inventory in all the markets recently. In particular, in eastern China, price of 20MnSi is even lower than that of common carbon billet and that price stayed for a relatively long period of time. If we look at the billet prices on the cost side or historically, we will find that 20MnSi price should always be RMB 50-100/mt ($6-13) higher than the common carbon one. But, with the rebar market gradually stepping up, this situation will change. The slab market continued to be bearish. In spite of the slight climbing in flat rolled prices, it is not enough for rolling mills to make large purchase of slab. Although slab prices did not move further down supported by the exports, the sluggish market performance won't change in short term. In previous week, a leading slab producer in Tangshan lowered the domestic quotation by a big margin so as to strive for more orders. According to the latest information from Latin America's negotiations with the US and the EU on slab exports for Q4, the decrease range may not be as big as expected, which boosted the confidence of domestic steel mills. Overall, steel mills are optimistic about the market in September. The start-up in the markets of rebar, medium plate and hot rolled coil, which are now at a low price level, will drive up the demand for semi finished steel.