Sentiment in the local and import billet markets in China worsened on Monday, June 7, following the recent drop in rebar futures prices and the restrictions on re-rolling mills in the Fengrun district this week, which will put pressure on demand for billet.
Steel mills in Tangshan have cut billet prices to RMB 4,940/mt ($772/mt) ex-works, down by RMB 60/mt ($9.4/mt) since Friday. This price level is equivalent to $683/mt without 13 percent VAT. The price decline has been due to the recent announcement of production restrictions for independent re-rollers in the Fengrun district from June 5 until June 13, aimed at improving air quality this week. Though the real impact on billet consumption in Tangshan will not be very big, it will certainly be reduced slightly, according to market sources.
Moreover, on June 7, rebar futures closed at RMB 4,959/mt ($775/mt) at Shanghai Futures Exchange, dropping by RMB 216/mt ($33.8/mt) or 4.17 percent from the previous trading day on June 4, fully offsetting the rises last week. This has reflected the worsening of sentiments in the billet market, in particular.
As a result, the tradable price level for import billet in China has been assessed at hardly above $670-675/mt CFR on Monday, versus $690-710/mt CFR late last week. As SteelOrbis reported earlier, two lots of ex-Vietnam BF billet were traded at $675/mt FOB and $683/mt FOB, translating to $700/mt CFR and $708/mt CFR China. But in the current conditions it will be hard for traders who purchased this material to sell to the end-users in the local market in China, so they will wait or resell in other outlets like Southeast Asia, market sources have shared with SteelOrbis. “The trend in China is unclear, the impact of futures is huge,” an international trader said.