ASEAN mills have agreed to cut billet offers and have provided discounts to sign deals since last week sales were hindered due to high prices and the bigger gap with ex-China prices. However, a further drop is unlikely as the Chinese market has started to show signs of a rebound since today, March 19.
The leading Indonesian mill has been ready to offer at $500/mt FOB against firm bids early this week, down from the official offers at $515/mt FOB last week. Also, ex-Vietnam billet offers have been reported at $500-505/mt FOB, declining by $10/mt from the previous deal for this origin. Moreover, in negotiations additional discounts are possible. In particular, the most recent deal for 10,000-20,000 mt of Indonesian billets has been signed at $490/mt FOB today. “I think this is a trader covering its short position,” a Singapore-based trader said.
The ex-China 3SP billet reference price first hit its lowest level at $480/mt FOB on average, down from $490-495/mt FOB a week ago, but today it has rebounded to $490/mt FOB on average, following the rises in steel futures prices. A few traders have said that, following the low-priced deals done by Chinese traders last week, there have been no new trades at increased prices so far.
In particular, according to market sources, a deal for up to 20,000 mt of ex-China 150 mm 5SP billet was done to the Philippines at $515/mt CFR last week, translating to $490/mt FOB or $5/mt below, depending on the freight. Also, one deal for ex-China 5SP billet was rumored as having been signed to Indonesia in the first half of last week. The lowest-priced sale was rumored as done on Friday, also to the Indonesian market, at $503/mt CFR and for 3SP, due to “the sudden drop in Chinese futures.”
Rebar futures at Shanghai Futures Exchange have added 2.85 percent on Tuesday, while the local spot billet price has settled at RMB 3,423/mt ($482/mt) ex-warehouse, increasing by RMB 23/mt ($3/mt) from the previous day, according to SteelOrbis’ data. Market sources agree that the production cuts in China will bring some revival in the local Chinese market in the near future, and steel prices will also be supported by rises in raw material prices, with iron ore prices up by $7.35/mt over the past two days.
Nevertheless, it is still questionable whether the international market and other suppliers like those from the ASEAN region will manage to react accordingly and rise prices this week. “It will be very hard for sellers to hold prices firm after such a strong downtrend. China needs to be much stronger,” a trader said.
