Local and export Chinese steel billet prices have continued to drop on Monday, August 12, coming closer to low psychological thresholds. However, market sources have different opinions about when the bottom will be hit.
The ex-China 3SP billet reference price has lost $7.5/mt on average today, coming to $440-450/mt FOB, falling below the $450/mt FOB mark, which has been a psychological threshold for many market sources. “The market is so pessimistic, and demand concerns exist given the lack of any positive market signals and the only hope is that the September market will be better,” a Chinese trader said. Another source at a large trading company in China has said that the free-fall of prices has also been dragging down demand and the selling off of the old standard of rebar in the local market has not ended yet. He said, however, that he does not see price levels being much lower than the current low prices.
The average local ex-warehouse billet price in China has come to RMB 3,053/mt ($427/mt), losing RMB 62/mt since last Friday. The benchmark price of billet in Tangshan has settled at RMB 3,020/mt on ex-works basis, dropping by RMB 50/mt compared to late last week. “If the market goes below RMB 3,000/mt, it may result in panic and more closures [as some mills have already started production cuts],” a Chinese source said.
Some improvement in the steel market is expected, not before the last week of August, and mainly on the back of expectations. And until that time, the weak steel market will find support only from the pressure on raw materials, to ease the already high losses. Today, steel mills have implemented the third round of price cuts for local met coke by RMB 50/mt, while import iron ore with 62 percent Fe content has settled at $98.4/mt CFR, again below $100/mt CFR.
$1 = RMB 7.146
