Prices for ex-China billet have continued to go down this week with traders targeting not only neighbouring markets like Southeast Asia and Taiwan, but also distant destinations like Turkey and the GCC. In all these markets, Chinese traders have been able to offer the lowest prices in comparison to all other sellers, but in such a falling market buyers are afraid to buy, seeing increased risks.
In Southeast Asia, ex-China 3SP 150 mm billet offers have been reported at $500-505/mt CFR Manila and $500/mt CFR Jakarta since late last week. But no deals at this level have been confirmed so far. “There are no deals that I know of. The whole market is spooked,” a trader from Singapore said. “Traders are offering very low prices in short positions, so we see that risks are increasing too,” a source from Manila said. He added that, though offers are said to be backed by Chinese mills, if in the short run steelmakers cut production due to losses, then traders may be not able to fulfill orders.
Lower Chinese prices have put pressure on billets of other origins. For instance, offers for ex-Indonesia billet have already slipped to $510/mt CFR Manila, from $520/mt CFR at the lowest possible from the ASEAN region a week ago.
Chinese billet offers to Taiwan are at $500/mt CFR with possible $5/mt discounts, but bids from buyers in the country are at $485-490/mt CFR for now.
In Turkey, the latest offers from China have been reported at $520-530/mt CFR for large lots of 45,000-55,000 mt. The major competitor of China in Turkey is still Russia as it can offer smaller volumes, though at slightly higher prices, at $540-545/mt CFR in general.
In Saudi Arabia, Chinese traders have dropped offers to $515/mt CFR this week from $545/mt CFR reported last week. Buyers prefer to wait and see as they are not confident in buying in such a falling market. In particular, the previous ex-Asia deals (from China and Indonesia) to Saudi Arabia were done at $560-565/mt CFR in the first half of October.
However, in this destination ex-Iran billet prices could compete with Chinese. “Iran sold billets at $468/mt FOB and the freight to the GCC is better, so the Chinese will not succeed,” a trader said.
The SteelOrbis reference price for ex-China billet is settled at $470-490/mt FOB from early this week, down by $10/mt from last Friday.
Falling export prices from China are still a result of the weak local market. Average billet prices in the local market in China have dropped by RMB 162/mt ($22/mt) over the past week to RMB 3,528/mt ex-warehouse on November 1. This level translates to $434/mt, excluding 13 percent VAT.
The SteelOrbis reference price for imported billet in China has been cut to $430-440/mt CFR, down by $20/mt from last week.