Prices for ex-China billet have remained stable at high levels, following the rises recorded last week. Even though some small negative correction has been seen for ex-Indonesia billet offers on Monday, market sources believe that all Asian billet quotations will be supported in the near future by high costs and further increases in freight rates.
The SteelOrbis reference price for ex-China 3SP billet stands at $460-475/mt FOB on March 23, with the higher end of the range adding $5/mt since late last week. A number of market sources reported offers at $475/mt FOB as sellers believe that production costs will stay high or even rise further in the near future. “Chinese steel is climbing more or less and support comes from coke, which rose by its maximum limit today, and local rebar prices have increased by RMB 20/mt,” a Chinese trader noted. The spot iron ore price is stable at $110.95/mt CFR, but coking coal and coke furthers surged by 11 percent and 7 percent at Dalian Commodity Exchange since Friday.
Also, ex-China billet prices have been supported by the strong yuan with the middle rate of the PBOC standing at $1 = RMB 6.9057 today, while the market exchange rate was $1 = RMB 6.95-7 in January.
But market sources said that the tradable level for ex-China billet is not above $460-465/mt FOB at the moment.
The Indonesian mill has voiced its billet offers at $485/mt FOB, which is slightly lower than $490/mt FOB last week. But market sources do not take this as a sign of a reduction as prices were already too high. The shipment period has changed from April to May now. The last part of April shipment billet from Dexin Steel was sold at $480-485/mt FOB last week. “This was not for the domestic market, as Indonesian buyers were on their Eid holiday last week,” a trader commented.
In addition to factors supporting FOB-based prices, most ex-Asia offers on CFR basis have been stable or even slightly higher amid further increases in freight. Market sources said that the freight rate for a medium cargo from China to Southeast Asia is $27-30/mt at the moment, while for a large billet vessel from China to Turkey it would not be below $55/mt. The rise is around $2-5/mt compared to the rates heard last week.