Prices in the import billet market in China have declined further over the past week, following some slight local decrease and the lack of sales that Russian producers have experienced in other Asian countries. However, taking into account that prices have come very close to cost levels (and below costs for some sellers), a further drop is unlikely.
A deal for ex-Russia billet has been reported at $590/mt CFR China, down from last week’s reference price of $600/mt CFR and most offers at $600-610/mt CFR last week. Some people were saying that a sale was done at an even lower level - $570-580/mt CFR, but this could not be confirmed by the time of publication and “Russian mills are already not happy about that price [$590/mt CFR],” a large Asian trader said. At least one large Russian supplier confirmed that $570-580/mt CFR is lower than its costs.
In addition, there was talk in the market that one of Chinese traders had taken a position from Russia and bought some volumes at $600-610/mt CFR for further sales to Taiwan or Southeast Asia. Most Chinese sources said that this price level is too high for China and “re-export may face some legal issues,” a trader said. There have been deals from Chinese traders for ex-Russia billet in May, but not all traders are dealing with re-exports.
The SteelOrbis reference price for imported billet in China has settled at $590/mt CFR, down $10/mt over the past week.
The average local billet price in China is at RMB 4,573/mt ($687/mt) ex-warehouse on May 31, going up by RMB 13/mt ($2/mt) today, May 31, but down by RMB 35/mt ($5/mt) over the week. This translates to $608/mt, excluding 13 percent VAT. “I believe prices will rebound because of the lifting of the lockdown in Shanghai [from June 1] and as the government is stimulating the economy,” a source told SteelOrbis. The Chinese authorities announced a package of 33 measures to support finance, investments and industrial producers on May 31.
In this context, billet prices, at least local prices, in China may rebound if the rebar market shows an improvement. Rebar futures at Shanghai Future exchange have increased to RMB 4,684/mt, up by RMB 63/mt ($9/mt) today and up RMB 216/mt ($32/mt) over the past week.
$1 = RMB 6.6607