The ASEAN billet market has witnessed a significant drop in activity as prices have declined indicatively, but buyers have been waiting for more decreases, seeing the unexpectedly sharp correction in the Chinese market. So, most ASEAN mills have been cautious in offering at the moment and are not in a hurry to sell, even though short position offers for ex-China billet have started to emerge at lower levels.
An indicative price for ex-Indonesia billet has been reported at $495/mt FOB, down by $10/mt from the official offer seen last week. But market sources said that the mill is not in a position to voice firm offers at the moment and is keeping away from active negotiations, understanding that in deals buyers would wait for at least $5-7/mt discounts. “$495/mt FOB is the correct price for now, in line with at least one deal last week,” a Chinese trader said. Another Asian trader said that Dexin Steel is refusing to cut its price below this level, having good order books for July shipment. At least four deals have been done at $495-500/mt FOB by ASEAN mills over the past 10 days, but no new transactions have been reported since last Thursday.
The ex-China reference price has been at $495-500/mt FOB, stable from the previous day and down by $5/mt from late last week, due to constant declines in futures and spot prices. “At the moment, ASEAN and Chinese prices are at the same level, and so there is no boom in sales from China. It really depends on the movements in the Chinese domestic market. If prices will drop more [locally], it [increase in overseas sales of Chinese billet] would be possible,” a major Chinese trader said. The average local billet price has settled at RMB 3,463/mt ($487/mt) ex-warehouse, down by RMB 80/mt ($11/mt) over the past two days. Weak fundamentals and seasonally falling demand have been behind the recent drop.
Moreover, low-priced ex-China 3SP billet offers from traders have been heard at $506-507/mt CFR in Indonesia. This level translates to around $486-487/mt FOB, and most market sources believe it is a short position, as traders expect that the Chinese market will keep following a downward trend. At the same time, the previous lowest offers for Indonesian billet to the local market and to Thailand were at $515/mt CFR, while ex-Iran offers have lost $5/mt over the past week to $510/mt CFR.
In the Philippines, bids from customers have dropped to $510-515/mt CFR, versus deals at $520-525/mt CFR a week ago, but sellers are resisting. An offer from Russia mill has been reported at $520/mt CFR, while $5/mt discounts can easily be achieved, according to sources.
$1 = RMB 7.1083
