The Chinese billet market has opened after the Labor Day holiday on a very positive note amid a bullish outlook for demand and a rise in futures prices, as well as the firm increase seen in raw material prices. Even though ex-ASEAN offers are mainly stable, there is not much allocation from Asia now, except from China.
The SteelOrbis reference price for Chinese billet has added $10/mt compared to late last week before the holiday, to $480-490/mt FOB. “The market is hot, considering rising costs with gains in iron ore and coke prices. Steel has become the new target of money now… The local billet price [in Tangshan] is up RMB 40/mt today,” a local trader said. Demand for rebar and billet is expected to remain firm in the coming few weeks as buyers will replenish stocks, which has pushed up local prices. So, offers in the export market have been bullish, even though the overall supply volume for the international market will be stable compared to April. “We are not receiving many firm offers today, but I don’t think there will be a shortage from China as production will improve. It is just the first day after the holiday,” an Asian trader said.
New sales of Chinese 5SP billet to the Philippines are expected at $505-508/mt CFR compared to the previous sale at $498/mt CFR. In Thailand, one small deal is heard to have been done at $498/mt CFR for Chinese 3SP in the second half of last week, but the new level has to start from $505/mt CFR, sources have said.
There is a lack of new offers of Chinese billet to the GCC and Turkey today, but market sources expect increases of $5-10/mt compared to the previous levels. “I still believe that the Chinese workable level for the GCC is $540/mt CFR, but for others like Southeast Asia they will be higher than before the holiday,” a Chinese trader commented.
The Indonesian mill has kept its offers for billet stable at $485/mt FOB. “Now they offer for August shipment. They have no need to sell and no one will buy,” a Singapore-based source said.
One of important reasons for the rise in the Chinese billet price has been the increase in raw material prices. Coking coal and coke futures added 2.6 percent and 2.0 percent today, May 6, respectively. Iron ore with 62 percent Fe content has risen by $2.5/mt to $112.45/mt CFR, compared to April 30.
