ASEAN-based mills have started to hike prices on Friday after the drop seen only early this week as futures prices in China have continued to rise, while strong expectations that the Chinese authorities will announce property market stimuli next week have been circulating in the market, SteelOrbis learned on June 2.
The leading Indonesian billet producer has announced new offers at $510/mt FOB, up by $20/mt from the level issued by the producer at $490/mt FOB on Wednesday, May 31. These offers have already been widely discussed in the major importing destinations. For instance, in Turkey offers for ex-Indonesia billet have been voiced not below $545/mt CFR today, while in the Philippines offers have been at $530/mt CFR and traders have started to withdraw their low offers, targeting $515/mt CFR at the lowest on Friday.
Offers from Malaysian BF-based mills have been voiced at not below $515/mt FOB from yesterday evening, up from around $500/mt FOB in deals reported earlier this week. “Mills have been rejecting bids at $510/mt FOB, aiming for an increase of at least $10/mt from the previous sales,” a trader said, commenting on prices from Malaysia. Offers from mills in the ASEAN region are for the second half of July mainly. The recent offers from Malaysia translate to $550/mt CFR at the lowest for Turkish buyers, which is up from $540-545/mt CFR confirmed in two previous deals for 10,000-20,000 mt for June-early July shipment. “There was an offer for Malaysian billet at $535/mt CFR to Turkey, but it was for an IF-based mill. The chemistry of the billet is almost similar, but still not many buyers are ready to risk,” a Turkish trader said.
This move by ASEAN mills has been expected by market sources amid the stronger signs of a rebound in China. As of June 2, rebar futures at the Shanghai Future Exchange are standing at RMB 3,596/mt ($507/mt), up by RMB 103/mt ($14.5/mt) since May 26 and firming up by 1.4 percent from the previous day. The better sentiments have been boosted principally by expectations of support for the real estate industry by the government. “The market has followed an uptrend based on the news that the Chinese authorities will issue new stimuli for real estate next week,” a source in China said. The government has been trying to avoid aggressive support measures lately, hoping that the market will regulate itself, but the data show that sales and new construction figures have continued to decline rapidly and this is unlikely to slow down without intervention by the authorities. According to Bloomberg, among the measures discussed is the relaxation of restrictions for residential purchases.
The reference price for ex-China billet has increased by $10/mt today to $500-510/mt FOB. Re-rolling operations in north China have been recovering during the given week and sentiments have been better, bolstering the billet market in China.