January 2025 has started on a negative note in terms of China’s billet exports. The absence of further stimulus measures, the declines in futures prices, poor demand during the winter and the expected slow restocking ahead of the Chinese New Year holiday have all contributed to the decreases seen in ex-China billet quotations. However, since demand is very weak and buyers are bidding at lower and lower levels, sellers have been not very aggressive, at least so far.
The SteelOrbis reference price for ex-China billet stands at $425-440/mt FOB for February shipment, with the midpoint at $432.5/mt FOB on January 7, moving down by $2.5/mt on average from the previous day and down $12.5/mt over the past week. Most offers were heard at $435/mt FOB on Monday and at $430/mt FOB on Tuesday this week. “I don’t see many orders lately as the market is negative and everyone wants to wait,” a Chinese trader said. One deal was rumored at $430/mt FOB from China, but the details have remained unconfirmed by the time of publication. Some market sources believe that, if true, this contract was signed late last week. “Today, we are getting billet [offers] at around $430/mt FOB [from mills], but buyers are not paying such prices. Buyers’ ideas are $5-10/mt lower,” a Singapore-based trader said.
Demand in the local market in China has been weak due to seasonal factors and there have been some expectations that the Chinese authorities will delay the announcement of new RRR and interest rates cuts until considerably after the Chinese New Year holiday, which has worsened sentiments in the market in general. Also, with talk about the new US president about to impose additional tariffs on China, the local currency has depreciated. Though the middle exchange rate announced by the PBOC has been rather stable, the spot market exchange rate has moved to above $1 = RMB 7.33 on January 7, versus $1 = RMB 7.29 in late December and the previous lowest rate of $1 = RMB 7.25 on December 10. The depreciation of the Chinese currency has provided some support for exporters, who have had to cut prices.
The Indonesian mill has been holding its offers for March shipment stable at $437/mt FOB, after a few deals closed at $433/mt FOB for February shipment, as announced earlier. A deal from one of the Malaysian mills has been rumored at $455/mt FOB, with the higher price being because the Malaysian material is duty-free in Turkey. This information has not been confirmed by the time of publication and, if true, the deal is probably to cover a short position, according to market sources. As for February shipment, another mill is ready to provide $450/mt FOB, according to SteelOrbis’ information.
