Prices for ex-China billet have fallen further today, June 3, following a slump in futures prices due to bearish news regarding steel demand in China and the expected tariffs hikes by the US. Some talk about negotiations at $405/mt FOB has emerged but has not been confirmed, being “too aggressive” even for the current weak market.
Ex-China billet reference prices have settled at $410-420/mt FOB today, down by $7.5/mt from the level seen late last week before the short holiday. There have been firm offers at $415/mt FOB, and some additional small discounts are possible, according to sources, but rumors that “$405/mt FOB has started to come out today” have been widely denied by market sources. “This is too sharp a drop. Yes, demand is very weak in China, but there is no reason to fall that much in one day,” a trader said.
The main drivers of the fall after the holiday were the news that US Section 232 tariffs applied to all steel and aluminum imports will be raised to 50 percent from 25 percent, effective this Wednesday, and also weak demand data and expectations. “Home sales are falling and we have entered the summer season, so the downtrend is normal, the negative margin is not normal,” another source said.
The leading Indonesian mill has decided to keep its billet offers stable at $428/mt FOB for September shipment, being in no rush to sell at the moment. Slab prices have also been stable at $437/mt FOB for August shipment, while Indonesian wire rod offers have settled at $505/mt FOB.