Since late last week import billet prices in China have been under pressure and a number of deals have been reported lately at lower prices. Suppliers have been trying to sell some tonnages ahead of the long holiday in early October in China, while demand worries have emerged due to the more severe energy production cuts, in particular in the eastern provinces of Zhejiang and Jiangsu.
Billet deals at lower prices early this week
Early this week, 20,000 mt of billet from Russia’s Far East region were traded at $705/mt CFR China. In addition, an Indian billet lot has been sold by a trader at $700/mt CFR. There has also been a rumour about a sale at slightly below $700/mt CFR to China on Wednesday, but it could not be confirmed by the time of publication. This $700-705/mt CFR level is $5-10/mt below the contract prices for ex-Indonesia and ex-CIS billet at $705-715/mt CFR last week.
The market has been full of rumours about other deals. For instance, market sources have reported a sale from Vietnam at $710/mt CFR and from Indonesia at the same level as having been done on Tuesday and Wednesday. But a number of large traders have failed to confirm this so far. “Indonesia has offered, but no takers,” one source said. Since late last week, offers for ex-ASEAN BOF billet have been heard at $720-725/mt CFR.
Also, there has been information about two lots of ex-Turkey billets of 45,000 mt each sold at $624/mt FOB to China. But sources have assessed this price level as being too high for now, and said that the deals, if done, were done some time ago and that the price should include extras of $7-8/mt for the chemical content. Also, the freight is said to be lower than $100/mt from Ukraine, for instance.
The latest deal from the Black Sea to China was concluded at $705/mt CFR for 40,000 mt of ex-Ukraine billet last week, translating to $605/mt FOB. And new offers are at $700-705/mt CFR China.
Suppliers from the Middle East have been offering at $710-715/mt CFR, while ex-Iran billet has been available at $700/mt CFR.
Demand worries emerge amid energy consumption cuts
Overall demand for billet in China has retreated, following the tightening of restrictions for energy consumption in a number of provinces, such as Zhejiang and Jiangsu. During most of September, the restrictions have mainly affected crude steel production and demand for imported billet has been firm. But lately sentiment has changed as energy consumption cuts have started to impact re-rollers, with some of them having been asked to cut production by 50 percent or halt operations by the end of the holidays (October 1-7).
This has made Chinese traders more cautious in purchases, even though rebar futures prices have been on the rise. Futures at Shanghai Futures Exchange have added RMB 60/mt ($9/mt) to RMB 5,657/mt. “Restocking ahead of the long holiday is normal and it supports long steel prices in China, but demand for billet is not so good,” a local trader said.
Local billet prices in Tangshan have added RMB 20/mt ($3/mt) to RMB 5,210/mt ($806/mt) ex-works, translating to $713/mt.
The outlook for the post-holiday period is unclear. On one side, China is expected to continue import billet purchases as restrictions for crude steel production are going to be prolonged. But on the other side, many market participants believe that the energy shortage may also be for a longer period and that the rebar market outlook is not as promising as it usually is for October after news of the possible collapse of real estate giant Evergrande.