The Asian billet market has been showing signs of reaching a bottom for the near future amid expectations for a further stimulus to be announced in China and rises seen in futures prices as a result. At the same time, mills based in the ASEAN region have been concluding rare deals to distant markets where they have a tax advantage, while remaining uncompetitive in other sales destinations.
The ex-China reference price for billet has settled at $445-455/mt FOB, edging up by $2.5/mt on average from yesterday and since late last week. The latest deal prices have been reported at $445-450/mt FOB, done mainly to Asian buyers for different grades late last week and early this week. But “I believe since yesterday’s recovery in Chinese rebar futures, $445/mt FOB today sounds low, unless the seller is shorting the market. In my opinion, it [stabilization of prices and some possible rebound] is happening exclusively due to cost support, so I doubt we will see Chinese billets much below $450/mt FOB and these days Chinese prices are driving the rest of the open trade world prices,” an international trader said. At least two Chinese traders confirmed that the aggressive mood among Chinese sellers has eased, and prices are not expected to fall further at least until the end of the week, though generally the fundamentals in November are weak and a demand rebound locally is unlikely in short term.
A deal for 5SP Chinese billet with high manganese content has been heard at $475/mt CFR in Indonesia as having been done early this week, while small deals for 3SP billets from China have been rumored to the Philippines and Indonesia at around $465-467/mt CFR, but the details have remained unclear by the time of publication.
As for other origin billet sales in Asia, the only deal for ex-Japan vanadium-added billet has been heard at $480/mt CFR Taiwan.
The improvement in sentiments in the billet market in China happened after “the NDRC meeting showed a positive outlook in the economy and Guangzhou may have improved sales of housing amid announced measures [Guangzhou said today, November 19, it will enable homebuyers to gain local residency while investing in property]”, a large Chinese trader said. Also, Shanghai and Beijing have indicated that the standards for the classification of houses into ordinary and non-ordinary will be canceled and this will cut the tax burden on buyers, stimulating the weak demand.
Ex-ASEAN billet price levels have this week been significantly above ex-China prices lately - at $470-475/mt FOB. The official offer price from the Indonesian mill has been at $470/mt FOB for February shipment, while two weeks back the producer had been targeting $480-485/mt FOB. But no deals have been heard as most buyers are not interested in February shipment at the moment.
At the same time, deals for Malaysian billets have been discussed recently for the Turkish market, where Malaysian origin material enjoys zero import duty. In addition to the sale reported last week for 150 mm billet at $513/mt CFR, market sources have reported that this week more volumes have been sold at $505-509/mt CFR, with the lower price level corresponding to 165 mm billet, which is cheaper given greater supply from Malaysia and lower popularity among buyers. The shipment is said to be for January. One more cargo may be available from Malaysia, with offers heard at the higher level of $515/mt CFR.