The situation in the Asian billet export market has failed to change dramatically this week but offers have been corrected down after some reduction in Chinese futures prices for steel and especially raw materials. Though there have been more negotiations, the latest price decline has been insufficient for most customers and only rare deals have been reported in Turkey.
The SteelOrbis reference price for ex-China billet stands at $430/mt FOB today, December 9, declining by $7.5/mt on average compared to last week. “This decrease is coming from the local market, as futures are down and demand in winter is going down. But I don’t see this as a slump. It is a natural correction,” a Chinese trader said.
A few market sources agree that the main driver of the recent billet price decline has been a drop in coking coal and coke futures in China. The most popular coke and coking coal futures at Dalian Commodity Exchange lost 5.8-6.1 percent yesterday and 2.4-2.7 percent today, signaling that demand for the raw material is weak and also the outlook is dull.
However, some Chinese market players believe that later this week prices for steel in China may again rebound a little since, as a Chinese trader stated, “After the sharp fall in futures, and some sales, prices are going up. Production is not strong.”
There have been not many deals for Chinese billet signed recently, but negotiations have definitely been more active after the price decline. Two large lots of Chinese billets are disclosed to have been sold to Turkey at $465-468/mt CFR base last week and this week. Also, a Saudi Arabian importer is in the market, but its bids are below the previous booking price - below $455/mt CFR - versus offers heard at above $465/mt CFR.
In Southeast Asia, 5SP billet prices from China have been at $450-455/mt CFR Manila. “Futures fell a lot, but the physical market is not that low. I would say that $450/mt CFR for 5SP 150 mm billets is still not good enough for buyers [in SE Asia],” a Singapore-based trader said.
The official offer price level for ex-Indonesia billet is at $435/mt FOB, down by $5/mt from last week. But since the offers are for March shipment, interest from buyers has been low.