The Asian billet market is stable in terms of prices early this week, and buyers have been staying away since offers have increased for them amid higher freight rates. Though the steel production cuts in Tangshan until mid-July may support billet offers from Asia for one week, in general the mood has already started to worsen, according to market sources.
The SteelOrbis reference price for Chinese billet has remained at $425-430/mt FOB for September shipment, stable from late last week. A number of offers have been heard in the market at $425/mt, $428/mt and $430/mt FOB early this week, according to market sources, but, even though some offers have started to come at below $430/mt FOB, slightly less than late last week, the market is mainly described as “unmoved.” “There may be very limited demand at $425/mt FOB and below for traders who need to cover short positions,” a Chinese-based source said.
While demand from Asian end-users is minimum and Turkish buyers are looking for closer shipments, there has been a rumor about a sizable trade at equivalent to around $423-425/mt FOB for the GCC market.
But another problem has emerged for buyers with rising freight rates. This is connected with the start of the grain season, but also after the latest attacks on vessels in Red Sea, including those carrying steel billets, the rates for the Asia-Middle East route may increase more. One trader said that at the moment the freight for a large volume from China to Turkey will be above $35/mt. “With the rise in offers, freight also went up, so there is no sense [for Chinese seller] to drop the FOB price, it will mean nothing for the buyer,” a trader said, adding that exporters are not ready for a bigger drop, even with some small decline in futures prices seen early this week.
The average local billet price in China stands at RMB 2,928/mt ($409/mt) ex-warehouse, down RMB 17/mt ($2.4/mt) from last Friday, according to SteelOrbis’ data.
The Indonesian billet offer has remained at $435/mt FOB for October shipment, with $430/mt FOB possible in negotiations.