The Chinese billet market has failed to sustain the uptrend seen last week and both local and export prices have retreated this week, following the rapid declines steel futures. This has led to stabilization of ex-ASEAN mills’ offers, though previously they were expecting some increase.
Ex-China 3SP billet reference prices have settled at $430-440/mt FOB on September 3, down by $10-15/mt from late last week. “Chinese sellers are inviting bids at $440/mt FOB today and lower levels are also possible, all based on the futures market,” an Asian trader said.
A major Chinese trader said that weak local demand has “killed” the upward mood at least for now, while supply is still relatively high. “Steel futures fell faster on the second trading day of September and closed with a three percent drop for most items and the physical [steel] price is lower by around RMB 20-50/mt in most regions,” a Chinese source said, adding that the market is awaiting US interest rates cut, which may provide some support for the global market.
The current ex-China FOB prices translate to around $450-458/mt on CFR basis to Southeast Asia, while 5SP offers have been heard at $465/mt CFR. This means that the import prices in the region have lost $5-10/mt in offers compared to last week.
The major ex-Indonesia mill has been offering at $445/mt FOB this week, in line with the latest deals done late last week. After selling 120,000-150,000 mt over the past ten days, the Indonesian mill was planning to increase offers to $450/mt FOB. But this has not happened. “I see the market being more rangebound in the coming weeks,” a Singapore-based trader said.
The previous deal prices of ex-Indonesia billet to Taiwan were at $462-464/mt CFR last week, while on Friday the Russian mill managed to trade 20,000 mt to Taiwan at $470/mt CFR. But this week these levels have already become unworkable, according to sources. Customers will target $450-455/mt CFR after the decline in Chinese futures.