China’s boom in import billet purchases returns, driving prices in Asia up rapidly

Wednesday, 11 November 2020 17:11:22 (GMT+3)   |   Istanbul

The surge in rebar futures prices and gains in the domestic spot market in China have triggered a fresh round of import billet purchases by Chinese customers. Prices in the latest deals have increased significantly, by $15/mt, and even higher bids have been heard recently, which signals that the import activity will last for the near future.

Buying of Southeast Asian billet remains a priority

According to sources, after deals done last week from Vietnam and Indonesia at $455-457/mt CFR China for 3 SP and 5 SP billet, the next transactions were reported at $460-462/mt CFR China from Southeast Asia and then at $469-470/mt CFR from Indonesia, according to SteelOrbis’ information. The price difference in these new contracts has been attributed to the continuous increase in local prices in China, which supported the rise in bids for imported material. “These deals [at $460-462/mt CFR] are already old, released in the market just recently,” a trader said.

At the moment, sources are assessing the workable price level for Southeast Asia billet, which is not a subject to two percent duty, to China at $475/mt CFR. “Hoa Phat refused to sell at $465/mt FOB [equivalent to $475/mt CFR] and offers at $470/mt FOB [$480/mt CFR China],” a source from Vietnam said. The latest offers from Indonesia’s Dexin are also at $480/mt CFR China.

New transactions from Middle East and negotiations with the CIS

After some break, import billet purchases from suppliers other than those from Southeast Asia have resumed to China. Two sizable contracts from two different suppliers from the Middle East have been heard at $463-468/mt CFR, according to sources in Asia. This price level is in line with the tradable value for Southeast Asian billet. One supplier has been in negotiation with Chinese importers for around 10 days and they finally closed a deal almost at their target price.

CIS-based billet exporters have also been receiving many inquiries from China, but most of the large mills have been no in hurry to sell. “We see bids at $465/mt CFR from China,” a source said. At this level there has been a deal rumoured, but it has not been confirmed by the time of publication. One trader has said that the most recent inquiries have even been at $470/mt CFR, but “the problem is that there are no volumes”. Mills have said that they want to wait for further developments as the Chinese market is strong. “China’s prices for both longs and flats go up every day. High prices will continue up to the end of the month. China will get all available volumes in the market,” a source told SteelOrbis.

Local prices in Tangshan have increased by RMB 70/mt ($10.6/mt) since last Friday to RMB 3,580/mt ($542/mt) ex-works today, Wednesday, November 11. “Tight supply, rising finished product prices and the appreciation of the Chinese currency have increased buyers’ willingness to accept higher import prices for billet in China,” a major Chinese trader stated.

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