Escalation of exports influence domestic semis market

SteelOrbis Shanghai Driven by the strong demand in international market, Chinese semi-finished steel prices recorded continuous increases throughout last week, with the rise of domestic demand sharpening the rising curve further. The prices of semi-finished products increased RMB 130-170/mt ($16-21) week on week. In recent weeks, the export prices of Chinese semi-finished steel maintained $400/mt FOB and above level, with much export orders and inquiries and brisk commercial activities. Therefore, semi-finished steel producers are quite confident about their products and do not accept orders from domestic rolling mills at a relatively lower price. Additionally, the rapid increase in wire rod prices in both international and domestic markets made it possible for wire rod mills to accept paying a higher price for billets. These two factors led to the rapid increase in semi-finished steel prices last week. The increase in billet prices raised the costs of strip, section and rebar rollers, and forced them to hike their ex-factory prices continuously. According to the current market situations of all kinds of products, the end users are not totally accepting the increases in finished steel prices. But the recent strong rise in hot rolled product prices is expected to boost the strip prices, and convince strip producers to accept higher billet prices. Meanwhile, the price difference between common carbon billet and 20 MnSi billet has narrowed down. Therefore, semis producers are unwilling to produce 20 MnSi billets, which may either cause to a reduction in rebar output, or lead to an increase in both rebar and 20 MnSi billet prices in the future.