The situation in the Asian billet market has remained negative as ex-China quotations have kept falling, exerting pressure on ASEAN-based suppliers. However, prices in Southeast Asia’s import market have been at a standstill, with most buyers withdrawing bids, while traders are not sure if prices have significant space to decline further.
The ex-China reference price for 3SP billet has settled at $490-500/mt FOB, down by $7.5/mt from last week. The weak demand in the local market in China is the main reason behind the further fall, but the resumed talk that mills will be asked to cut steel production by the end of August and the PBOC’s decision to cut the key policy rates for the second time in three months may lead to the stop of the downtrend for some time, according to sources. “Some rebound [mainly in futures] is happening in the market since the afternoon, so we are not sure how easy it is to get $490-495/mt FOB now,” an international trader said.
The average local billet price in China has lost RMB 60/mt ($8/mt) over the past week, coming to RMB 3,500/mt ex-warehouse, which translates to $432/mt, excluding 13 percent VAT.
Ex-ASEAN 3SP and 5SP billet offers have remained officially at $505-510/mt FOB, stable from last week, but the tradable level has been assessed by most sources at $500/mt FOB. “Mills [from ASEAN] may start being desperate, having no deals, so they will agree to lower prices,” a source said.
Offers for 5SP billet in the Philippines have been at $518-522/mt CFR, almost stable over the past week and some sources have reported that the lowest possible for this grade is $515/mt CFR from some Chinese traders. But “last week the markets turned pretty sour due to the Chinese property debt issue… So suddenly all bids have gone and offers from $525-530/mt CFR dropped towards $520/mt CFR,” a Singapore-based source said. The main ex-Asia offers for 3SP billet are at $510/mt CFR.
The SteelOrbis reference price for 3SP and 5SP billet in the import market in Southeast Asia has remained at $510-520/mt CFR.
$1 = RMB 7.1768