Sentiments in the Chinese billet market have slightly improved over the past week, resulting in the stabilization of ex-Asia billet prices. Though market sources do not believe in an imminent rebound, further declines in billet prices are doubtful due to the rises in prices of raw material, now also including iron ore, expected production restrictions, and a short-term improvement in long steel demand.
The SteelOrbis reference price for ex-China billet has settled at $455-465/mt FOB, down by $2.5/mt on average over the past week. Some deals have been heard at $455-460/mt FOB, but, by Wednesday this week, most offers have been closer to $465/mt FOB. “China seems higher than that seen late last week and is above $460/mt FOB now,” a Chinese trader commented.
A representative of another large Chinese trading company said, “Chinese steel is supported by sentiments, steel futures have gained with less speculation and raw material prices are stronger. The local debar trade volume is nearly 100,000 mt per day, which is better than the previous 80,000-85,000 mt. But a typhoon will hit South China, so demand will be impacted more.”
In general, demand for Chinese billet is still reduced, with only some sales reported to West Africa at near $520-525/mt CFR, translating to around $460/mt FOB.
In Southeast Asia, traders have been aggressive and they have been offering lower prices for Chinese billet, expecting that FOB prices will resume their decline in August. In particular, offers for 5SP Chinese BOF billet have been at $483-487/mt CFR Manila, down from the previous $490-495/mt CFR. There have been deals for Indian IF 5SP at around $480/mt CFR, but “after that, the sellers [from India] are gone, so this level is the customers’ target, yes, but who can give it?” a Manila-based source said.
In the Asian market, Chinese billet prices will not be able to rebound soon, market sources believe, with competition being stronger recently. Not only have Indian sellers managed to sell some volumes, but there has also been a rumor about an Iranian 5SP sale at around $481/mt CFR Indonesia, which has been renegotiated lower down to $475/mt CFR, sources have said. The recent offers for Iranian 3SP billet have been heard at $470/mt CFR Taiwan.
The Indonesian mill has kept its September shipment billet offers stable at $470/mt FOB, but it has again cut its slab prices, to $480/mt FOB for August shipment, down by $10/mt over the past week.
