The continuing uptrend in the local billet market in China supported by production cuts in Tangshan have provided further support for the import billet market. Demand from China has remained strong and the latest deals have shown another $10/mt increase.
Three new deals have been reported from Southeast Asia to China recently. Contracts from the main Vietnamese producers and one Malaysian mill for 10,000-20,000 mt each have been signed at $630/mt CFR China, a number of sources have confirmed to SteelOrbis. “This forecasts another potential sharp increase from Hoa Phat, when they come back to offer. Hoa Phat is expected to aim for $615/mt FOB in the next round,” a trader said. The freight in the latest ex-Vietnam deal at $630/mt CFR has been estimated at not below $30/mt and the FOB price is around $600/mt. Previous deals for ex-Vietnam billet (both BF and IF) were at $617-620/mt CFR China.
In addition, a batch of ex-Indonesia billet has been sold to China at $635/mt CFR lately, while prior to this contract negotiations with Dexin Steel were at $625/mt CFR, as SteelOrbis reported late last week. The latest deals for ex-ASEAN billet have been for late April-May shipment.
Most fresh offers from ASEAN billet suppliers and future target prices have been heard at $640-645/mt CFR on Monday, March 29.
Furthermore, negotiations have continued for non-ASEAN billet, which is subject to two percent import duty in China. The tradable value for ex-Russia and ex-India billet has increased to $615/mt CFR, while last week negotiations were held mainly at $605-610/mt CFR in the middle of the week. The new target level would be $620-625/mt CFR for non-ASEAN billet or higher, sources have said.
Such interest in import purchases in China is linked to the lower supply in Tangshan, where the majority of mills have had to cut production by 30 percent to match stricter emissions rules. “Local prices make imports reasonable and we expect demand will remain in the coming months,” a local source said. The strong domestic rebar and wire rod market has been supporting the outlook for the billet segment in China.
On Monday, mills in Tangshan have increased their local prices by another RMB 70/mt ($11/mt) since last Friday to RMB 4,780/mt ($731/mt) ex-works, including 13 percent VAT.
On March 29, rebar futures at the Shanghai Futures Exchange have reached RMB 4,971/mt ($760/mt), up 2.56 percent or RMB 124/mt ($19/mt) compared to the previous trading day.
$1 = RMB 6.5416