Following sharp drops in local billet prices in China, market sources have started to talk about Chinese traders’ position offers of billet at low levels - below $700/mt CFR to Southeast Asia. Market sources believe that a return of Chinese origin billet to the export market is possible, but it is unlikely to become a trend as was the case with billet imports to China over the past months.
Offers for Indonesia origin billet from Chinese traders in short positions have been heard at $680-690/mt CFR in the Asian market, SteelOrbis has learned. Regional mills are asking for $710-720/mt CFR as the lowest, as they are not ready to go below the $700/mt CFR mark for now. Nevertheless, this level is below $730/mt CFR heard late last week as an offer level from mills.
Sources said that Chinese traders are “going short as prices [for billet in SE Asia] are expected to be weak in the coming weeks without China’s imports,” a source from Southeast Asia said.
Reports of a possible return of ex-China billet in the export market have been heard recently, as local Chinese prices have dropped. But a number of trading sources agree that it is more reasonable for Chinese traders to be offering billet originating from Southeast Asia, which is legal, while Chinese origin billet can be exported only as square bar in official documents. “It is possible [export of Chinese billet], but risks are high and the price should be really low,” a trader said.
Steel mills in Tangshan have announced a slight increase in local billet prices today, May 25. The price level, which lost RMB 230/mt ($36/mt) over the weekend, has improved by RMB 20/mt ($3/mt) since yesterday, to RMB 4,940/mt ($768/mt) ex-works. This price corresponds to $680/mt, excluding 13 percent VAT. The assessment for import billet is lower than this level, as in such a sharply fluctuating market bids are not above $650-660/mt CFR.
The SteelOrbis reference price for import billet in Southeast Asia was at $710-740/mt CFR late last week, but for now most market sources assess the tradable level at hardly much above $700/mt CFR.
$1 = RMB 6.4283