Prices for ex-China billet have been higher on FOB basis this week, supported by slow decline in inventories and production cuts, and, even though market sources believe that there will be a stable trend in the near future, there are no expectations that prices will retreat anytime soon.
The ex-China billet reference price has settled at $425-435/mt FOB, up by $5/mt from late last week, with most offers standing at the higher end of the range. Market sources said that a few large Chinese mills have been quoting billet at $435-438/mt FOB, but traders may provide $4-5/mt discounts on these levels.
The main reason behind the stronger offers has been recent production cuts and plans for lower output in December as well. In particular, there have been heavy pollution weather conditions, triggering yellow/orange alerts in Jiangsu Province since November 22 and November 24, which required enterprises to halt production and suspend transportation of coal, coke and other bulk materials. At nine o’clock on November 27, the emergency response measures will be lifted amid reduced pollution.
“The Chinese market had some positive news in the real estate [interest rates cuts] ... Luckily steel inventory keeps falling and local spot demand has been a bit better recently,” a Chinese trader noted.
Some improvement in demand for Asian billet has also started to be seen. Specifically, two deals for 5SP Chinese billet have been confirmed at $450-455/mt CFR the Philippines. “Today, offers are stable at the same level, and I don’t see strong activity,” a trader commented on sales to Southeast Asia. A tradable level for 3SP billet in Southeast Asia has been at $445/mt CFR, but most offers have been starting for this grade at $450/mt CFR in Indonesia and Thailand.
The Indonesian mill has kept its billet and slab offers stable at $435/mt FOB and $448/mt FOB, respectively, both for February shipment.
