Prices for billets and longs in China have posted an increase early this week, following the announcement of production cuts in Tangshan from mid-August and another sharp rise in coking coal futures prices, which has pushed up raw material prices.
The SteelOrbis reference price for ex-China billet has settled at $445-460/mt FOB, up by $5/mt since late last week. Most offers from large Chinese traders have been at the higher end of the range. However, a large trader noted, “There are no deals done at those levels. International buyers cannot pay and the highest possible [for rare buyers] is $445/mt FOB.”
“The story repeats itself and today coking coal [futures at Dalian Commodity Exchange] gave a max rise and broke the RMB 1,300/mt market, then all steel futures rose by one to two percent... Raw materials are very firm even though the production cuts were confirmed [in Tangshan] and the local coke market has posted its sixth round of price rises to mills...” a Chinese trader noted. The most popular January coking coal futures at Dalian Commodity Exchange jumped by seven percent today, faster than the 2.95 percent rise on Monday. As announced in late July, the Chinese authorities started inspections of coal mines in eight major provinces to check if raw coal production in 2024 exceeded mines’ capacities and if monthly outputs in the first half of 2025 exceed 10 percent of the announced annual capacity. These inspections have already led to supply reductions and, together with some limitations in transportation, this provides support for coking coal price rises.
In addition, the Tangshan administration announced that production cuts would be implemented between August 16 and September 3. It was stated that some cuts would occur depending on weather conditions until August 25, and that production would be suspended between August 25 and September 3. In total, daily steel output is expected to be reduced by 90,000 mt.
The leading Indonesian mill has announced billet offers stable at $455/mt FOB, but they are for November shipment, which is too early for the main customers to buy. The offers may be increased indicatively soon, market sources believe.