Following a slight increase in offer prices by Chinese suppliers, price stability has finally appeared and market sources consider that the current situation provides support for the market, given the appreciation of the Chinese currency and anticipated production cuts. At the same time, ASEAN region-based mills have increased offers, even though last week demand was not so good when prices hit a temporary bottom.
The ex-China 3SP reference price stands at $455-465/mt FOB, with the midpoint at $460/mt FOB, stable from Friday, but up $2.5/mt on average over the past week. “The RMB has appreciated a lot against the US dollar, making Chinese prices higher. But for 150 mm billet, China’s price is still better [than those from other Asian suppliers],” a Chinese trader said.
The PBOC’s midpoint rate of the US dollar to the Chinese yuan has come to $1 = RMB 7.1318 from its recent peak at $1 = RMB 7.1376 last Friday. The rate is controlled by the government, around which the yuan is allowed to trade within a two percent band. Moreover, the onshore exchange reached its highest rate at 7.115 on Monday morning, the highest in one month, as on Friday and over the past weeks the rate had not broken through the 7.2 point. “The exchange rate became the most important factor in export prices as not many changes are seen in the local market,” another Chinese source said.
Also, in the Tangshan area alone about three to five new blast furnaces are going to start maintenance works soon, which will lower crude steel production in this major Chinese steel production hub.
“It is hard to know where the price [for billet from China] will go. I think it will be relatively stable in August, without big increases or decreases,” another Chinese seller said.
The leading Indonesian mill has increased offers for billet to $465-470/mt FOB, up from $460/mt FOB last week, but “I have not heard conclusions above $460/mt FOB,” one of the large Asian traders said.
