China has resumed import billet purchases, which were previously quiet, mainly owing to the improvement in local billet prices, boosted by higher futures prices, while at the same time a seller was also forced to provide discounts to conclude a contract.
A deal for 20,000 mt of ex-Vietnam billet has been done at $642/mt FOB or around $672-675/mt CFR China, SteelOrbis learned from a number of sources. This price level is higher than last week’s bids from China, which were not above $650-660/mt CFR. But at the same time the previous booking of the same Vietnamese producer done last week to the Philippines, was at $650/mt FOB, $8/mt above the fresh contract to China.
The resumption of billet imports to China has been assessed by market sources as a good sign. Steel mills in Tangshan have raised their local billet prices by RMB 90/mt ($14/mt) since last week to RMB 4,910/mt ($759/mt) ex-works, which corresponds to $671.5/mt, excluding 13 percent VAT. “China has its 100-year anniversary celebration today [of the foundation of the Communist Party of China], so everything is stopped. Tomorrow, factories and yards will resume work. For the current month, environmental checks will be prevalent, so I’m expecting semi-finished steel products [prices] such as billet to be firm or strong on the back of production cuts,” a trader said.
A new offer for BF billet from Vietnam has been heard at $660/mt FOB, but market sources doubt that the seller will be able to increase prices much as overall market fundamentals are still weak. “I think they will have to lower the price again. Futures are up somewhat, but the physical market sentiment is very poor. There are far too many offers, especially for 150 mm billets: from Dexin, Alliance, Hoa Phat, SAIL, RINL,” an Asian trader said.
As of July 1, rebar futures at the Shanghai Futures Exchange are standing at RMB 5,146/mt ($795/mt), increasing by RMB 213/mt ($33/mt) or 4.3 percent since June 24.
$1 = RMB 6.4709