Prices for Chinese billet in the international market have dropped significantly and more Chinese mills have entered the market trying to push volumes abroad, seeing the depreciation of the local currency and no improvement in local demand. Also, ex-ASEAN billet prices have been under pressure, though overall allocation is still limited.
The SteelOrbis reference price for ex-China billet is down $10/mt from yesterday and down $17.5/mt since late last week, coming to $450-455/mt FOB. “Many Chinese mills are coming out to sell billets. Apparently, the margins are slightly better and the volumes bigger, and there is a shorter time in terms of getting paid,” a trader in Singapore said. Also, one of the main reasons for the stronger interest in exports from China has been depreciation of the local currency. The PBOC middle rate is $1 = RMB 7.1927 today, versus $1 = RMB 7.1016 on November 5. The market exchange rate of the US dollar against the RMB is even bigger - over RMB 7.23. “This [weaker yuan] has brought a little bit of leverage. And the [macroeconomy] policy will not boost the market. The winter is coming,” a large Chinese exporter said.
A deal for ex-China 3SP billet is reported to have been done to an Indonesian end-user at $471/mt CFR, which is $9/mt below the lowest level heard last week. Also, offers from Chinese traders to Taiwan have been cut by $5-10/mt to $475/mt CFR (equivalent to around $455/mt on FOB basis), while buyers have been looking for $465/mt CFR at the highest now.
Late last week, a deal for ex-South Korea billet was signed at $490-495/mt CFR to Indonesia, but this was for vanadium-added billet “for high manganese content”, according to a few sources, so the extras may be above $10/mt. “For the moment, the Chinese price has become the main price indicator again,” a regional trading source said.
At the same time, ASEAN mills have also been impacted. Before a contract announced from Vietnam last week at $468/mt FOB, another lot to a Chinese trader was heard to have been traded by the same Vietnamese mill at near the same level. The current tradable level for ex-ASEAN billet has been assessed at $465-475/mt FOB, but in general the allocation is still not so big.
One deal by a Malaysian mill has been rumored at the equivalent of $480/mt FOB for a large volume of 50,000 mt for the Turkish market where Malaysian billet is duty-free. Some sources said that the volume was 40,000-45,000 mt, and in such case, the FOB level would be $5/mt lower.