The tradable price levels for imported billet in China have fallen below the $500/mt CFR mark again, which has led to almost full halt of the trading activity. Foreign suppliers have been assessing the level, targeted by Chinese importers, as too low and economically unreasonable, so they have redirected their offer volumes to other destinations such as Taiwan and Southeast Asia.
The tradable level for imported billet in China has dropped to $490-500/mt CFR, down by $10/mt from $500-510/mt CFR reported on Friday and $15/mt over the week. “Many traders want to get below $500/mt CFR to place an order, but no supplier accepts the price,” a Chinese source said.
Lower billet and long steel prices in China amid the hot weather and slowdown of consumption have been the major reasons for the recent halt of billet imports in the country. The average local billet price in China has come to RMB 3,865/mt ex-warehouse on August 23, down by RMB 43/mt ($6/mt) over the week. This price corresponds to $499/mt, excluding 13 percent VAT.
Over the previous two weeks, deals for ex-Vietnam IF billets and ex-Japan EAF billets and negotiations for ex-Iran billets in China were at $505-515/mt CFR, but since prices have come back to below $500/mt CFR, the import market has come to a halt again. Most foreign billet suppliers have limited offers to China this week, seeing tumbling buyers’ price ideas. Major Russian billet producer in the Far East has been focused on negotiations with Taiwan, while traders have been actively offering ex-Iran billets to Southeast Asia. There has been information that a Russian seller has closed a deal to Taiwan at $515/mt CFR, lower than $525-530/mt CFR seen in offers a week ago. The recent deal price level is still higher than tradable price in China, though the contract has not been finally confirmed by the time of publication and some sources said that the firm offers are still near $530/mt CFR from Russia.
The tradable price level in Southeast Asia has been also going down, but remained at a higher level than in China. Traders have been ready to deal for ex-ASEAN EAF/BOF billets at $530-540/mt CFR Manila, while buyers have been waiting for the market to slip below $530/mt CFR. Last week the tradable level in Southeast Asia was at $530-550/mt CFR.
According to market sources, the highest possible price for ex-Iran billets in Thailand would be $510/mt CFR versus last week’s offers at $515-530/mt CFR.
At the same time, though most market sources are cautious about the developments in the Chinese market in the coming weeks, some of them are voicing optimism. "In the following two weeks the temperature will be back to normal. So prices can bounce back because the peak season is coming," a trader said. However, some market sources are not sure if the rebound is possible in the very near future. "Maybe there will be delays in demand this year," one of the large traders mentioned.
$1 = RMB 6.8523