Following the sharp drops in rebar futures and new restrictions on rerolling operations up to the end of the current month, the Chinese import billet market has collapsed. No improvement is not expected in the short term, which has led to some panic among traders. They have started to offer their position cargoes elsewhere outside China.
Today, October 22, the tradable level for imported billet to China has been reported at $650/mt CFR at the highest, SteelOrbis has learned, while some source even said, “China’s bids are non-existent. If they bid today, it will be max $630/mt CFR.” The current price range is down $50/mt from the general bids seen late last week.
Rolling mills in Tangshan’s Fengrun district were ordered to suspend production as of 24:00 on October 19. The restriction will last until the end of the month to improve air quality. Moreover, vehicles are forbidden to arrive at Jingtang port, as well as at Caofeidian Port. This proves not only that sentiments have collapsed in China, but that real demand has also been severely hit. Rebar futures prices have continued to drop on Friday, closing at RMB 4,900/mt ($765/mt), down by 6.5 percent compared to the settled price on Thursday.
The local billet price in Tangshan has dropped by RMB 100/mt ($16/mt) today, coming to RMB 4,990/mt ($779/mt) ex-works, translating to $689/mt excluding 13 percent VAT.
In such a complex situation, in the import billet market in China traders have started to actively offer their cargoes elsewhere - to Southeast Asia, East Asia, Turkey and the MENA region in general. “All these positions are now coming to the market, because of the collapse in China,” a source said. Most offers are for 150 mm billet, originating from Vietnam, India and even the Middle East, with shipments in November-December.
SE Asian importers have been receiving offers for 3SP and 5SP billet at $680-700/mt CFR for position cargoes. “That is a lot of redirected materials being offered in Southeast Asia. This will cause a panic in the market and there will be oversupply if China totally stops buying,” a Manila-based source commented. No deals have been reported so far with buyers believing prices may come down to $660-670/mt CFR.
Ex-India billet position cargoes have been offered at $690/mt CFR to Turkey.
$1 = RMB 6.4032