Offer prices for ex-Asia billet have increased this week amid gains in Chinese futures over the past two days. But the latest deals for billet in Asia have been reported at stable or even at slight discounts and sources in major outlets do not view the latest upward movement as a sustainable trend.
The ex-China billet reference price is at $425-430/mt FOB, up by $5/mt from last week. The main reason for an increase has been the rise in futures prices - rebar at Shanghai Futures Exchange increased by 1.64 percent and 0.46 percent on Monday and Tuesday, respectively. As for the fundamental supporting factors, there is the obvious decline in steel production amid some mills’ need to fulfil the annual targets, the slow demand, and the environmental inspections at mills. “I think it's challenging for prices to go up sustainably, yet a downtrend is limited due to some mills cutting production. It should be a range-bound market,” a Chinese trader said.
As for Southeast Asia’s import market, most buyers still see the tradable levels for 5SP at $445/mt CFR at the highest and $435-440/mt CFR for 3SP, even though offers can be voiced at higher levels. “Billet will be stable at $430/mt FOB now, so offers to Southeast Asia will be near $450/mt CFR and higher. But we need to see if there is demand at these levels,” an international trader said.
The latest deal for 5SP billet of Asian origin has been heard to the Philippines at $445/mt CFR. Some sources believe this is true and that the deal was done last week, but this could not be confirmed by the time of publication. In addition, a contract for 3SP was heard at $438/mt CFR to the same destination. “I don't think [the upward trend is] sustainable for Southeast Asia, but possibly prices will settle higher for distant markets like Turkey if it is considering buying billets for the coming winter when scrap collection slows,” a Singapore-based source said.
As for the Turkish market, most offers from China are coming at $465-470/mt CFR (just slightly above $465/mt CFR generally seen last Friday) with a lack of demand seen for sizable volumes.
The major Indonesian mill has increased its January shipment offers by $5/mt from last week to $435/mt FOB, while its slab price has been voiced at $448/mt FOB, for February shipment.
