Billet import activity in China was sluggish during most of the current week, but since yesterday, April 21, prices have resumed their gains and demand has improved. The main driver has been the hike in rebar futures prices in China and overall good expectations. This has happened even despite the restrictions which have started to be imposed on re-rollers in Tangshan for the April 22-30 period, SteelOrbis has learned.
The latest deal for 30,000 mt of ex-Malaysia 150 mm billet has been signed at $670/mt CFR, up by $10/mt compared to the workable level seen in the market last week and previous deals for ex-ASEAN origin semis. An Indonesian producer has also been in negotiations at the same price level, though the fixing of a deal has not been confirmed by the time of publication. “China's buying level was lower before yesterday, but futures prices jumped,” a trader said.
Last week and early this week, a few deals for non-ASEAN billet were done, which have been disclosed lately. A Turkish mill sold a large lot of 50,000 mt to China, while a supplier from Oman also closed a contract for a sizable cargo. The final price levels have not been disclosed, but market participants said that “$645/mt CFR was the workable level for non-ASEAN billet before yesterday.”
This week, the leading Indian mill has closed a tender for 30,000 mt of 150 mm billet at $591/mt FOB, while SteelOrbis has learned that it is expected to be traded to China.
But on Thursday, the tradable price level for non-ASEAN billet, which is subject to two percent import duty, has increased to $650-655/mt CFR. On Wednesday, 30,000 mt of ex-Russia billet were sold at $650/mt CFR China.
Over the past week, demand for billet in China has weakened due to the restrictions on re-rollers in Tangshan. According to the official statement on April 16, all re-rollers in Tangshan (using gas for production operations) will have to cut emissions by 30 percent and those in the Fengrun area will have to fully stop operations from April 22 to April 30.
One of the main Chinese traders said that the demand for both local and import billets in Tangshan has become slack, weakening the support for prices first, but owing to the healthy situation in the other provinces and the stronger rebar market, import billet prices gained support later. Today, on April 22, steel mills in Tangshan have rolled over their domestic billet prices at RMB 4,940/mt ($761/mt) ex-works.
Rebar futures at the Shanghai Futures Exchange have risen by RMB 50/mt ($8/mt) on April 22 to RMB 5,208/mt ($802/mt). This followed a hike by RMB 74/mt ($11/mt) a day earlier. The market has been supported by the wider steel production restrictions, which will be implemented not only in Tangshan, but also in Handan.
Billet prices in China may edge down gradually in May after the traditional peak season of March and April, sources believe: however, import buying is likely to continue.
$1 = RMB 6.4902