Prices for Asian billet - mainly Chinese billet - have remained almost unchanged this week since, while sellers have been under pressure from weak demand, strong coking coal and coke prices as well as tentative signs of the deblocking of the Strait of Hormuz have prevented prices from softening. At the same time, the reopening of the Strait of Hormuz may also lead to a possible resumption of Iranian billet supply to Asia, though these are just rumors for the moment.
The Chinese billet reference price has remained at $470-475/mt FOB, in line with last week. “Asian billet in the regional market is now at $470-472/mt FOB, but billet for Saudi Arabia will always be slightly more expensive so $475-480/mt FOB is workable only there,” a Singapore-based source said. A deal for a large 50,000 mt lot of Asian billets is heard to have been booked in Saudi Arabia at $527/mt CFR with freight assessed at around $50/mt for Jeddah. Possible resumption of normal traffic through the Strait of Hormuz may support shipments of iron ore and pellets and will make transportation of already booked cargoes of billet much easier, but it is unlikely to boost new billet purchases much as local mills will work first of all to increase their own steel production.
As for the regional import market in Asia, some Chinese suppliers have been ready to offer $490/mt CFR Taiwan, while earlier in June the price level was at $495/mt CFR. But, generally, offers are at the same level. For instance, offers for Chinese 5SP to the Philippines are at “sub-$500/mt CFR levels”.
Asian buyers have been cautious as they are waiting for lower levels that are possible from Iran if the deal with the US is successful. A few buyers have started to receive offers (around $480/mt CFR Southeast Asia has been rumored). But market sources believe that it will soon be hard to sell to Asia even at lower levels. “They can give a number, for sure, but the question is how shippable are cargoes from the Persian Gulf? How many shipowners can one find today eager to risk going there?” a trading source said. Also, a few market players shared that the first exporters will try to resume work with GCC buyers.
The Indonesian billet price is still at $483/mt FOB for September shipment.
