SteelOrbis Shanghai
Over the past week China's billet market maintained its overall stability, with no price change being observed in the various regions. Meanwhile, export quotations declined continuously, but only to see a flat trading performance.
On June 20, the price of common carbon billet in Tangshan, Hebei Province was unchanged from last week at RMB 3,120/mt ($410/mt), while the price of 20MnSi remained constant at RMB 3,200/mt ($420/mt).
Since the long products market halted its decline, semis producers have no longer been in such a panic and are now gradually picking up their confidence. Some market players have pointed that although most rolling mills mainly consumed their own stocks and only made a small quantity of purchases, some traders thought there would not be any big room for further downward movement, and thus commercial activity began to show an upward tendency.
Moreover, due to the implementation of the official policy of eliminating out-of-date steel capacity, many small-sized blast furnaces and converters have already been shut down or have had their operations suspended, resulting in reduced market supply. In particular, these measures are having a remarkable impact on Shanxi Province.
In recent days, the billet export quotations of the Chinese mills kept going down. At present, the quotation of common carbon billet is around $510-515/mt FOB, but overseas customers are accepting the quotation only in rare cases. However, this is not because the buyers cannot afford this price, but rather due to the fact that Chinese billet has been in a downward trend over the past several weeks and so buyers are waiting for an even lower price. Once the domestic market becomes stable, the overseas orders will come in great numbers. Currently, since the CIS billet prices are higher than the Chinese ones, the Southeast Asian countries still do not have any other sourcing channel.
All in all, China's finished steel market is expected to fluctuate up and down moderately in the short run, but the possibility of a sharp decrease does not seem to be on the cards any longer. Therefore, the future billet market is likely only to see a minor reduction. With regard to next week, the market is expected to continue its current stable state on the whole.