Chinese customers have increased their interest in import billet purchases as there are expectations of lower crude steel production in the second half of the year in China, and as a result futures and local billet prices in the country have improved.
A contract for 30,000 mt of ex-Indonesia 3SP billet has been closed at $670/mt CFR China for August shipment this week, according to sources. New offers for 3SP/4SP billet have been increased to $680-685/mt CFR. Last week, most bids for 3SP billet were below $670/mt CFR, but “today billet prices went up and $670-675/mt CFR is definitely workable,” a local trader said.
Negotiations for ex-Vietnam 5SP billet have been heard at $650-655/mt FOB, which is higher than a deal at $642/mt FOB done to China a week before, but there was no information as to whether the new deal was done or not. The price of $650-655/mt FOB corresponds to $680-685/mt CFR China, according to sources.
As a result, the tradable price level for import billet to China has improved to $670-680/mt CFR.
This happened after the improvement seen in the local market. Steel mills in Tangshan have increased billet prices by RMB 40/mt ($6.1/mt) today, July 6, to RMB 4,930/mt ($763/mt) ex-warehouse, which is equivalent to $675/mt, excluding 13 percent VAT.
Rebar futures at Shanghai Futures Exchange have added RMB 151/mt ($23/mt) today, closing at RMB 5304/mt ($821/mt).
Market sources expect China will be active in the import billet market for some time, but prices will depend strongly on the rebar demand in the spot market. “Everybody is getting greedy but the end-user market is very weak,” an international trader said.
The better situation in the Chinese billet market is going to support sentiment in the Southeast Asian and East Asian markets.
An Indian private producer has already sold 20,000 mt of wire rod grade billet to Taiwan at $695/mt CFR, which may include a minimum $15/mt extra.
$1 = RMB 6.4613