End of construction season hits Chinese billets

SteelOrbis Shanghai Overall decline in long steel prices also suppressed billet prices in China. Meanwhile, slab prices are more stable thanks to previously stronger flats market. China's macro-economic measures, the end of construction season, unfavorable conditions in neighboring countries are all among the reasons for bad mood in the market. As the construction season has come to an end in China, the billet purchases of rebar rollers have slowed down. The billet market in Thailand and Vietnam, which are among the largest billet importers from China, is not good either for the same reason. Steel mills in Tangshan are currently offering their 120 mm x 120 mm common carbon billets at around 2,990 RMB/mt ($374) FOB. Meanwhile, the recently announced macro-economic measures have increased Chinese billet makers' and traders' need for urgent cash. Therefore, especially small scale mills and traders nowadays prefer to sell their products in domestic market with cash payments instead of exporting. Nevertheless, because the domestic market is not brisk either, the local market prices of Chinese billets decreased around RMB 50-80/mt ($6-10) week on week. 120 mm x 120 mm common carbon billets are currently being sold at around RMB 2,800/mt ($350) in Tangshan market. The prices in the domestic market were stable in the previous week. However, billet prices in northern region began declining from the beginning of last week. With the recent overall decline in strip steel, section steel and wire rod prices in northern regions, the demand for billets is decreasing. Most of the market players are waiting to see what will happen next. The semis producers also lowered the ex-factory prices because of the difficulties in sales. The price decrease of long products in eastern China has directly influenced the billet demand of the rolling mills in that region. With a strong “wait-and-see” attitude, and high billet inventory, the rolling mills have basically stopped the purchases last week. On the other hand, slabs still maintain their strong level at around RMB 3,400-3,500/mt ($426-428) for Q235. Overall, it is difficult for billet market to recover from the downward trend in the short term, but slab price will remain stable.