Prices for local and import billet in China have remained relatively stable over the past week as though futures have posted some increase, overall demand for billet and rebar has been poor. As a result, the import billet market in China has still been halted, while the bearish moods have continued to prevail in Southeast Asia. The gap between the tradable level for billet in China and SE Asia has been at $50/mt minimum.
Chinese average local billet price was at RMB 3,670/mt ex-warehouse on July 26, just RMB 2/mt higher than on July 19, representing the low volatility of the market. The price translates to $481/mt, excluding 13 percent VAT.
In such conditions, the tradable level for imported billet has remained at last week’s level of $480/mt CFR. Though sources report bids mainly below this level - $470/mt CFR or so. Also over the past few days iron ore has posted some rebound, which prevented moods in the Chinese steel market from being too bearish. Though of course, “the demand for longs has remained slack and the sentiment has remained cautious,” a source said. “There is no point to give billet prices now until demand in China starts to improve”, another Chinese source said.
No firm offers have been heard for ex-Russia billet to China as for most mills, prices at below $500/mt CFR are under the line of profitability. An offer for ex-Russia billets has been heard at $510-520/mt CFR Taiwan, though there has been no information about deals at this level.
At the same time, prices for imported billet in Southeast Asia, which are at much higher levels than in China, have remained under pressure. Traders have been still offering position cargoes at $530-535/mt CFR to the Philippines, while mills have been slowly cutting prices, understanding that the weak demand is the major downtrend driver. While last week most ex-ASEAN BOF mills’ offers were at $545-550/mt CFR the Philippines, this week the lowest offer to Manila for 3SP billets from the mill could be at $535-540/mt CFR.