The mood in the Asian billet market has improved this week after an extremely negative previous week. Ex-China billet prices have inched up amid some increase in futures prices and overall inactive market conditions ahead of the holiday next week. Together with less pressure from China, allocation from ASEAN has been less, so in general market sources believe that mills are unlikely to cut offers any further this month.
Ex-Indonesia billet prices have settled at $440/mt FOB this week, just slightly lower than the reference price of $440-445/mt FOB last week and official offers at $445/mt FOB. The new level was confirmed in one deal done this week to a trader with the targeted sales destination said to be “definitely not Asia, only distant markets,” according to a trader. Most market sources believe that this is a bottom for Indonesian billet prices as October shipment order books are closed and the mill will have maintenance works at casters 1 and 2 in the second half of November, and so it is now offering mainly for December shipment. Also, the seller has already sold some November shipment slabs, so in general semis allocation from Indonesia will be limited for November.
As for China, the reference price for 3SP billet stands at $420-440/mt FOB today, up by $15/mt on the upper end of the range seen late last week. “Offers are about $430/mt FOB or higher, but sales have been poor recently,” a large Chinese trader said, adding that the market is preparing for holidays and a sharp fall in futures prices has ended, which is positive. At the same time, for some markets traders are still active in offering competitive prices for Chinese billet and some sales at CFR levels are discussed.
Late last week, some open origin billet was traded to Taiwan at $430-435/mt CFR, a sharp fall from the previous offers at $440-450/mt CFR to this destination. Traders were booking in short positions as they did not expect the Chinese market to improve much. However, by Tuesday this week, offers have rebounded to $440/mt CFR Taiwan for Chinese 3SP billet. Moreover, offers to Indonesia have already reached $450-460/mt CFR even for 3SP, versus $445/mt CFR last week.
