Rising steel prices futures in the Chinese market amid some improvement in sentiments and expectations of government support ahead of the Chinese New Year holiday have resulted in some slight rises in offers from Chinese and ASEAN region-based sellers. However, this has failed to result in any rises in deal prices or tradable levels as buyers do not believe this situation will continue for long, while a number of large-volume deals have already been signed at lower price levels, especially to the GCC.
The ex-China billet reference price has moved up from $425-435/mt FOB to $430-440/mt FOB today, January 14, though most sources believe that the tradable level is near to the lower end of the range, while higher prices are “reflecting the slow market before the holidays, with billet close to RMB 3,000/mt [ex-warehouse],” a local source said. While last week negotiations were held at as low as $425/mt FOB, now the bottom level for sellers is $430/mt FOB, a number of market sources confirmed. “Actually $430/mt FOB is a suitable price offered now from Asia,” a Chinese trader said, explaining the position of sellers. Next week, Chinese market players are going to start to exit the market ahead of the long holiday.
In the Chinese steel market, “Some mills have raised local prices three or four times over the past few days. Even though the debar trade is still at a lower level, sentiment is more confident and some speculative buying has been showing up,” a trader said. Rebar futures gained 1.44 percent yesterday and 1.48 percent today. “I can see only one reason for this rebound - expectations of a stimulus policy,” one of the largest Chinese traders said.
GCC-based buyers have been among the most active in negotiations for Chinese billet. According to market sources, last week three cargoes of 50,000 mt each were sold at $467-468/mt CFR to Saudi Arabian buyers for end of March-early April delivery. These deals have not been confirmed on FOB basis, though market sources assess the freight to two major Saudi Arabian ports at around $40/mt, meaning traders have already got or will target below $427-428/mt on FOB basis.
The leading Indonesian mill has increased offers for March shipment by $3/mt to $433/mt FOB. “China is up a bit, tracking futures prices. But I suspect it's just brief optimism ahead of the Chinese New Year, so buyers are quiet,” a Singapore-based source said.
One of the main Malaysian mills, which was offering at $445/mt FOB for early February shipment last week, is heard to have sold a cargo of 44,000 mt to a trader, and market sources believe that the final level was below $440/mt FOB. “The Turkish market is not good now in term of prices, so the premium for Malaysia [which is duty-free in Turkey] is lower,” a Chinese trader said.
