The Asian billet market has moved down again this week as the aggressive price declines have resumed in China despite expectations, due to the drop in the local rebar market, declines in futures prices and iron ore again slipping below $100/mt CFR today. In this situation, some ASEAN-based mills have also decided to cut billet offers, trying to accelerate September shipment sales.
Ex-Indonesia 3SP billet offers have dropped to $460/mt FOB early this week, down by $10/mt on average from the reference price last week. Moreover, some small deals and negotiations have been at $458-460/mt FOB for September shipment, down by $5-7/mt from the previous small-volume contracts.
In particular, Indonesian 5SP billet was sold at $485/mt CFR to the Philippines last week. The Indonesian mill has been inviting bids at $475/mt CFR (translating to slightly below $460/mt FOB) in the local market for 3SP, which has already been assessed as too high for customers as some traders have already booked billet at $460-465/mt CFR Indonesia in short positions. “New bids are coming at $450-455/mt CFR Indonesia for 3SP. Even selling short is risky now,” a Singapore-based source said. Last week, the lowest offers for 3SP in the Southeast Asian market were not below $470/mt CFR. “I thought prices would stabilize but they keep dropping as China’s futures prices fall and fall,” another source said.
Indonesia’s FOB price translates to near $500/mt CFR for Turkey, though duty-free Malaysian material is still quoted at around $515/mt CFR. Chinese billet has remained the most competitive with official offers easily being found at $490-495/mt CFR and even $485-490/mt CFR is assessed as workable from traders offering in short positions, but “China is not that regular a supplier for Turkey. Buyers look more at ASEAN materials,” a local source commented.
The ex-China reference price has fallen by $5/mt since last Friday to $455-460/mt FOB, but some sources said that even lower levels have been available in the evening today, July 30. “The market fall accelerated today due to the negative news in the HRC export market [as Vietnam has started an AD investigation on import HRC] and given the pressure on rebar sales locally from the change in standard,” a Chinese trader said. Also, there are rumors that traders, still having high stocks of rebar, will have to export some volumes of old standard materials. Some 7-10 million mt of Chinese rebar may be offered at low prices abroad as the new standard is expected to be implemented on September 25.
The average local billet price in China has settled at RMB 3,155/mt ($442/mt) ex-warehouse, down by RMB 23/mt from yesterday and down RMB 93/mt week on week.