Chinese billet sellers have been cautious in offering to the export markets amid the possible introduction of export duty, while some of them have already announced higher prices from today, April 6, amid higher costs. At the same time, the import market in China has remained silent as the tradable level is still $60-70/mt below the cheapest offers.
Ex-China billet prices were at $770-780/mt FOB last week. During the Tomb Sweeping Holiday on April 4-5, offer prices remained stable, while they have increased to $790-800/mt FOB today, up about $20/mt amid the increase in raw material prices. Rumors said that China may implement an export tax to curb the export of billets, and this has also limited the number of offers from China. “As regards the export duty, nobody knows the possible details. So, mills are reluctant to offer and also since iron ore and coke prices are increasing,” a Chinese trader said. With higher costs, the profits of Chinese mills when exporting billets at the previous prices were very low and market sources believe that for mills it is more reasonable to aim for $800/mt FOB and above in the current conditions.
Market sources told SteelOrbis that Zhejiang traders exported too many billets in March, and so there are rumors that China may implement an export tax for billet. The total export sales of billets from China have exceeded 100,000 mt, sources said, though no confirmation of the total tonnage was heard.
Buyers from the Philippines received offers at $820/mt CFR for ex-China 3SP 150 mm billet last Friday, but today there have been no firm offers. Market sources are evaluating the current FOB prices from China at $830-840/mt CFR Manila. These price levels are considered unworkable, given the bearish mood in Southeast Asia.
In Southeast Asia, buyers have been waiting for discounts. The latest ex-Indonesia billet offer was at $820/mt CFR to the Philippines, Thailand and Indonesia, while most buyers in the Philippines are asking for $800-810/mt CFR, with others asking for below $800/mt CFR.
At the same time, some Southeast Asian importers can switch to purchases of cheaper ex-Iranian billet, redirected from China to Thailand or Indonesia. For instance, at least 50,000 mt of ex-Iran billet have already been booked to Thailand at $750-760/mt CFR. “Russia offered at $790-795/mt CFR, but there is no reason to buy while Iran is cheaper,” a trader from Bangkok said.
The average local billet price in China has increased by RMB 65/mt ($10/mt) over the past week to RMB 4,945/mt ex-warehouse, according to SteelOrbis’ data, which translates to $686/mt. “The imports are fully halted as the tradable level is still below $700/mt CFR,” a source said. The SteelOrbis reference price for import billet in China has been settled at $680-690/mt CFR, up by $10/mt on average over the past week.