Asian billet export prices have softened a little compared to early this week as the sentiment in China has been rather negative, considering rising inventories and the expected increase of supply after September 3. As a result, traders have been eager to give discounts to push sales, and have been successful in Southeast Asia.
The ex-China billet reference price has settled at $435-445/mt FOB today, August 27, down by $2.5/mt from the previous day, but stable compared to late last week. Most firm offers were at $440-445/mt FOB, but market sources said that a few traders have decided to purchase at $430-435/mt FOB. “Traditionally, September is the golden month for steel demand. The end of summer is the end of the ghost month, so demand is flat, not bad but it could be better,” an Asian trader said, describing the situation in the region. Despite the production cuts announced in Tangshan until September 3, in early August Chinese steel output increased, so at the moment steel inventories have been putting pressure on Chinese prices and preventing them from recording any rises ahead of the seasonal demand improvement. “Chinese billet producers are making profits now, so nobody will cut output when there is profit [except for mandatory cuts sought by the government]. But domestic rebar and billet demand is weak in China, so inventory will continue to increase. This will put pressure on further price increases planned for September,” a Southeast Asian source said.
A deal for 30,000 mt of ex-China 5SP billet is heard to have been closed at $455/mt CFR late last week. Some sources believe that prices have been a bit higher up to $457/mt CFR, but in any case, “we see below $460/mt CFR now, while the previous booking to SteelAsia was at $465/mt CFR [around two weeks ago],” a trader commented. “I think that the billet price will fluctuate within a very narrow range only... maybe between $450/mt CFR Manila (at the lowest) and $470/mt CFR (at the highest),” an end-user in the Philippines said.
As for Chinese 3SP, offers have been heard at $455/mt CFR, but a lower level at around $450/mt CFR is possible, with bids from Thailand at $445/mt CFR.
The leading Indonesian mill has been trying to adjust offers closer to the Chinese price level and has reduced its official billet offer for November shipment by $5/mt from late last week to $445/mt FOB. Still, this price and shipment period remain inconvenient for most traders and end-users, who will prefer Chinese material.