Chinese billet prices see sharp decrease

SteelOrbis Shanghai Influenced by the export tariffs for semi finished products, billet prices began to see a sharp decrease in the end of week 44, with slab prices experiencing a weak trend. On November 8, the price of common carbon billet in Tangshan, Hebei Province, decreased RMB 90/mt ($11) to RMB 2,720/mt ($346), while that of 20MnSi is down RMB 70/mt ($9) to RMB 2,800/mt ($356). The ex-factory price of slab from Laiwu Steel is at RMB 2,920/mt ($371), equal to the level of the previous week. The new export tariffs for semi finished steel, effective as of November 1, have started to show their impact on the domestic semis market. The billet market in Tangshan has become bearish since the end of week 44. At present, the price of common carbon 150 mm x 150 mm billets is at RMB 2,700-2,720/mt ($343-346). Some mills still kept their price level at RMB 2,800/mt ($356), but there was no trading activity at all. Sources report that some small-sized mills are in quite a panic about the market and are selling products at RMB 2,600/mt ($330). The semis price in other regions also saw a decline throughout the past week, but only by a small margin. As regards northeastern regions, the local semis producers lowered their quotations little by little, but rolling mills are still inactive in purchasing. Market players estimate that semis prices are likely to see sharp drop in the future due to the bad sales levels. Generally speaking, the production costs of common carbon billet are at RMB 2,500/mt ($318) or so for most medium and small-sized mills and that for large-sized mills at RMB 2,550/mt ($324). Thus, there is still sufficient room for the market to go down in the future. On the slab side, although prices of slab from large-sized mills such as Laiwu Steel remained unchanged, some medium-sized mills have begun to reduce their deal prices. Medium plate prices decreased considerably in northern China over the past week; therefore, rolling mills producing medium plate cannot make any profit, which directly leads to the decline in slab prices. As with billet, the costs of Chinese slab are also quite low, at about RMB 2,700/mt ($343). If the demand becomes sluggish further, slab prices are likely to move down by a big margin.