The pressure on traders in the Asian billet market has increased further by the end of the week with the tradable levels slipping after a short-lived increase. Prices for local billet in China have posted constant declines since Monday, increasing the possibility that suppliers may want to resume export sales of Chinese billet in the near future. Nevertheless, a number of market sources believe that there will be only short period for this as buyers’ bids are still lagging behind and demand itself in China is expected to rebound in the second half of the month.
The offer level of billet from China has been reported at $590-605/mt FOB. Before the holiday, Chinese sellers were inactive in the export market and traders preferred to take positions from ASEAN mills. But since major producers in the ASEAN region have returned to the market with increased offers at $620/mt FOB from both Indonesia and Malaysia, ex-China billet levels have not looked so bad.
“If Asian prices still remain at $620/mt FOB, the resumption of China’s exports is possible,” one of the large Chinese traders said, adding, however, that for now Chinese prices still do not match buyers’ bids.
Adding up to $20/mt freight to Southeast Asia, ex-China billet prices translate to $615-620/mt CFR. This is lower than ASEAN-based mills’ official offers at $640/mt CFR, but higher than traders’ offers of position ex-Indonesia cargoes at as low as $600-610/mt CFR reported by the end of the week. Early in the week, Chinese traders offering ex-ASEAN positions started from $620-650/mt CFR Manila, then lowered their offers to $610-620/mt CFR and by Friday the lowest offers have been reported at $600-610/mt CFR. This means that the price for imported billet in Southeast Asia has added just $5/mt over the past week.
“There will not be too many exports [from China], because demand will come back and Chinese prices will go up again. This time demand will come back a bit later than predicted,” another Chinese trader said.
