This week, most major billet suppliers in Asia have hiked offers, given the recent production cuts in China, which lowered allocations and supported the mood of ASEAN-based suppliers. Nevertheless, buying activity has remained limited in Southeast Asia’s import market and there have been no other positive factors for the price trend reversal. As a result, some alternative billet sellers have taken a chance and have sold to the region.
The SteelOrbis reference price for ex-China billet has increased to $510-530/mt FOB with the midpoint at $520/mt FOB, up by $15/mt over the week. Most market sources have said that rare offers for Chinese origin billet are at $520/mt FOB and some claim even at $530/mt FOB, while the tradable level and the lowest possible is $510/mt FOB. “Chinese billets moved up sharply, but the buying interest in the market is still weak,” an Asian trader said. “The background to this [the current price increase] is only China’s production cuts,” another source said.
Following rises from China, the main Indonesian mill has increased its official offers to $515/mt FOB, up by $10/mt over the past week. “They may likely accept $510/mt FOB, but even then I don’t think anyone will be keen to buy after the last deals at $500/mt FOB,” a Singapore-based source said. A few market sources confirmed that Dexin Steel has still some part of August shipment billet.
The rises in the export prices for Chinese and Indonesian sellers have resulted in a surge in traders’ offers for Asian origins to the Southeast Asian market. Most offers from traders for 5SP billet to the Philippines have been reported at $530-540/mt CFR Manila versus $515-520/mt CFR and the workable level of $510-515/mt CFR last week. Traders’ offers to Indonesia and Thailand for 3SP 150 mm billet have been at $520-532/mt CFR at the lowest this week.
Southeast Asian buyers have been refusing to accept higher levels. Moreover, they have been receiving lower offers from alternative sellers. In particular, there has been information that a large cargo of ex-Saudi Arabia billet has been traded to the Philippines at around $515/mt CFR, which is almost in line with the previous deals for ex-China and ex-Indonesia BF billet done to the country over the past two weeks. “I believe this was for a full vessel of 40,000 mt,” a China-based source said, though this could not be confirmed by the time of publication. The SteelOrbis reference price for imported billet in Southeast Asia has been increased slightly - by $5/mt - from late last week to $515-520/mt CFR, taking into account the current tradable levels and deals.
“Most [Asian importing] markets are still really really slow. Plus, now that Russian billets have made a comeback, it’s difficult to see buyers accepting anything higher,” a Singapore-based trader said. As SteelOrbis reported last week, three batches of ex-Russia Far East billets were traded at $500-510/mt CFR to the Philippines and Taiwan. No firm offers have been reported for ex-Black Sea billet in Asia, but a few sources, involved in trading from this region, have confirmed that “negotiations are there” and “it is very possible, though “still difficult” mainly because of payment issues due to the Western sanctions. The tradable price level of ex-Black Sea billet is at $445/mt FOB on average, which translates to $490-500/mt CFR Southeast Asia, adding freight and expenses. Bids for ex-Russia billet in Taiwan have slipped to $495/mt CFR at the highest from $505-510/mt CFR as workable a week ago, but demand is only for very limited volumes. Also, some sources believe that Black Sea suppliers may consider providing significantly below $500/mt CFR to push large volumes in Asia.
The average billet price in China has settled at RMB 3,630/mt ex-warehouse on July 25, up by RMB 87/mt ($12/mt) over the past week, translating to $450/mt, excluding 13 percent VAT. The import billet reference price in China has been at $440-450/mt CFR, increasing by $5-10/mt over the past week.
$1 = RMB 7.1406
