Sentiments in the Southeast Asian billet market have worsened as low-priced offers of Chinese origin semis have emerged in the market recently. After about three years of absence from the international arena, China may again become an important market player because, even taking into account big risks to buy from China, offer prices in Asia will be under pressure for a longer-than-expected period.
A number of trading companies and re-rollers have reported offers at $415/mt CFR for ex-China billet in the Philippines and Indonesia. Even $410/mt CFR has also been possible to get, according to one source. There have been no reports of deals so far as buying from China involves a number of risks. “Rebar, wire rod and especially HRC prices have come down. Traders have no problem selling in short position. But regarding billets, I think they would be more conservative, considering the problems with documents before,” a Manila-based trader said. China has 15 percent export duty on carbon steel billet, and so in the past traders were changing documents and selling billet as square bar to avoid paying duty. “There were big expectations for billets to be exported. However, that is not the case for now as there are some ‘complications’ in exporting billet with a tax rebate,” a Singapore-based trader said.
Falling local long steel prices and weak demand together with fast growing inventories have been among the major reasons for the resumption of billet exports from China. Average local billet prices in China have dropped by RMB 75/mt ($11/mt) since trading resumed after the holidays on February 3 to RMB 3,273/mt ($474/mt) ew-warehouse.
Southeast Asian customers have taken a wait-and-see position, trying to evaluate risks. “Though low offers [for Chinese billet] are available, buyers still doubt any merit, if it is worth the risk or not, as a variety of sources are available,” a customer from Bangkok said. A number of sources have confirmed that the current workable price for billet of other origins is still $420-425/mt CFR Manila. Fresh offers for ex-Iran billet have been heard at $418/mt CFR Thailand, SteelOrbis has learned.