The negative sentiments in the Asian billet market have resulted in a small further decline in ex-ASEAN deal prices over the past week. And even though there has been no improvement in demand in general or strong fundamentals, market sources believe that prices will not fall further in the near future as the mood in China has improved today, October 24, with futures and raw material prices going up.
A few deals for up to 40,000-50,000 mt of ex-Indonesia billet have been done by the mill at $490-494/mt FOB, versus the previous transaction at $495/mt FOB reported last week. One of them at the higher end of the range has been rumoured to be for the South American market, while another one at the lower end has been taken as a trader’s position, according to a few Asian sources. Official offers from an Indonesian mill are still at around $500/mt FOB as the seller does not want to cut them, which has worsened the already weak sentiments.
The ex-China 3SP reference price has been settled at $490-500/mt FOB on October 24, up by $10/mt from the previous day, though stable from the previous week. “China’s FOB price was around $485-490/mt FOB, but with the futures increase just now, it should be higher,” a Singapore-based trader said. “$485/mt FOB [been as the reference price on Monday] seems on the low side now. I don’t think any steel mill is able to offer at this level at the moment,” another trader said.
The main reasons for the increase in ex-China billet prices have been the rebound in local and futures prices and the fact that “the currency exchange rate is worse,” a large Chinese trader commented, adding that $490/mt FOB is the lowest that could be found now, taking into account high raw material prices and the overall limited allocation at mills. Rebar futures at Shanghai Futures Exchange have added 1.34 percent from the previous day to RMB 3,630/mt on October 24. The Chinese steel market has been supported today by news that China will approve over RMB 1 trillion or about US$139 billion in new sovereign debts, which will boost infrastructure construction.
Average local billet prices in China have settled at RMB 3,450/mt ex-warehouse on October 24, up by RMB 22/mt ($3/mt) from the previous day, but still RMB 15/mt ($2/mt) lower over the past week. The level translates to $481/mt, while it is $425/mt excluding 13 percent VAT.
$1 = RMB 7.1786
