The Asian billet market has reopened after the long holiday in China with further price declines and the near-term outlook is still bearish. ASEAN region-based mills have not been very active early this week as they understand that they have to cut prices more to push volumes abroad.
Ex-Indonesia 3SP billet offers have declined slightly - by $5/mt from the pre-holiday level - to $500/mt FOB, according to a number of sources who received offers at the weekend. However, most market participants believe that the mill will have to cut prices more. “I would say they have not released new prices as buying ideas are now all low,” a trading source from Singapore said. The last deals for ex-Indonesia billet were rumored at $497-505/mt FOB to traders and for Indian buyers specifically. However, in the next sales traders expect to achieve $490/mt FOB.
The bearish sentiments have been due to the resumption of the downtrend in the Chinese billet market after the holiday, which is very unusual and signals oversupply in the market. The reference price for ex-China 3SP billet has come down by $5/mt on average to $480-500/mt FOB. One source said that official offers are at $490-500/mt FOB, but traders are ready to accept $480/mt FOB, seeing no demand at levels above that. “Buyers [in SE Asia] are targeting $500-505/mt CFR and I am sure they will achieve this very soon,” a source said.
Trading in the import billet market in Southeast Asia is still poor with the tradable level in the Philippines standing at $510-515/mt CFR, while buyers expect $500-505/mt CFR. “Iranian prices are not in line or even higher than Chinese prices, so all eyes are on China,” an international traders said.
Average local billet prices in China are at RMB 3,463/mt ex-warehouse, which is RMB 32/mt ($4.5/mt) below the level seen in the last day before the holiday, on September 28. This level translates to $427/mt, excluding 13 percent VAT.
$1 = RMB 7.1781
