A sudden rebound in the Chinese steel market has happened today, March 13, mainly triggered by the rise in futures prices based on expectations of stronger demand in spring, talk of steel production cuts for this year, and possible restrictions on coking coal imports. As a result, official FOB-based billet offers from China and the ASEAN region have increased, but traders are cautious and the latest sales and tradable levels in different import markets are still at lower levels as the market fundamentals have failed to change so far.
The SteelOrbis reference price for ex-China billet has settled at $430-440/mt FOB today, up by $2.5/mt on average from yesterday. Most offers heard today have been reported at the higher end of the range - $440/mt FOB - versus $430-435/mt FOB reported earlier in the week. “Prices [for Asian billets] have increased obviously, standing at $440-445/mt FOB, but no one has managed to confirm this [in deals],” a Chinese trader said.
Expectations for a better demand-supply balance are the main reason for the rebound that happened in China today. The market is awaiting the release of official news regarding steel production cut regulations for this year. If they are announced at the previous rumored level of 50 million mt, this will support prices from the supply side a lot. “News might be released any time now on the supply side,” a Chinese source said. In addition, “A rumor from the coking coal side has emerged that some ban might be enforced due to high port inventory,” he also noted.
The Indonesian mill has hiked its official offers by $10/mt to $445/mt FOB for May shipment. This happened partially owing to the rebound in China and as the mill itself has managed to sell some May shipment volumes already. A sale for 40,000 mt of ex-Indonesia billet has been heard at $440/mt FOB for May.
“I believe that some short-selling is still happening. The CFR workable price here is still around $450-455/mt,” a Manila-based source said about the tradable level for 5SP billet from traders. As SteelOrbis reported earlier this week, the latest deal for Chinese 5SP 150 mm billet was done to the Philippines at $460/mt CFR Cebu last week, translating to $450-452/mt CFR Manila. “I would say it is still possible to find $450-455/mt CFR for 5SP from some short-selling people,” another large Chinese trader said. However, some traders have decided to leave the market, awaiting a clearer trend in China.
Some Indonesian customers have received offers for 3SP billet at not below $450/mt CFR, while early this week one deal was done at $443/mt CFR.