Though sentiments in the Chinese steel market have only worsened early this week, ASEAN region-based mills have not dropped their offers for billets, mostly as April shipment allocation has been sold out after the sales made last week. Following the pause, ASEAN producers have accelerated slab trading, but only with a significant drop from the previous high offer prices.
The ex-Indonesia official offer price for billets has remained at $515/mt FOB, and only for May shipment. “They [Dexin Steel] claimed to have sold a good volume of billet and slab last week. Cargo readiness is already early-to-mid May now,” a Singapore-based trader said. The last deals from Dexin for billet have been heard at $510/mt FOB at the lowest, though the details and volumes of the sales could not be confirmed by the time of publication. “They have sold billets to the Philippines and slabs to Europe and to South America. So, they are not hungry. But, of course, once they get hungry that will be a different story because the market is only weaker now,” a European trader told SteelOrbis. Also, a deal for 30,000 mt of ex-Vietnam BF 150 mm 5SP billet was done at $510-515/mt FOB last week to a trader.
To conclude slab deals, ASEAN exporters have had to cut offers from the official $590/mt FOB level seen since late February to $550-560/mt FOB. At least three deals for 150,000 mt of slabs from Indonesia and Vietnam were heard at around these levels last week.
The ex-China 3SP billet reference price has slipped to $490-495/mt FOB, down by $7.5/mt on average since late last week. This price reflects the tradable level for traders, while mills can easily give $500/mt FOB, according to sources. There has been a slowdown in sales from China recently, but not due to the decline in offer volumes, but from buyers’ caution. “China’s bookings may slow a bit because of rumors of export duty. I heard some sellers are already trying to insist on clauses such as, if export duty is levied, it will be on the buyers’ account. Obviously, no end-user will ever accept that,” another international trader said. He also mentioned that, after some pause, deals may resume as “aggressive traders may try to take advantage, especially as the gap China’s FOB price and the ASEAN FOB price becomes significant.”
“I don’t think the billet export volume will decrease too much. The impact [of the possibility of the introduction of duty] is not so big due to sales pressure from high inventories,” a source at a Chinese mill said.
In the Southeast Asian billet market, the latest sale of 150 mm billet has been heard at $528/mt CFR to the Philippines. But this week, most buyers assess the market at $515-520/mt CFR Manila. The lack of 130 mm billet offered from China may lead to higher CFR prices in the region for some time.