The Asian billet market has stabilized this week with Chinese origin billets remaining the most competitive, while ASEAN mills are holding prices and are still not that active. However, trading has been limited as buyers have been waiting for further decline in prices, which didn’t happen, and it will be hard for Chinese mill, considering the current iron ore and coking coal prices.
The ex-China reference price has remained stable from late last week at $445-455/mt FOB. “China’s billets are the cheapest now. I would say $445/mt FOB is the current price. If the US dollar continues to stay strong against the yuan, we will see China continue active billet exports. Otherwise, the market will stabilize,” a Singapore-based trader said. Three large Chinese traders have shared the view that in the current market conditions Chinese mills will hardly provide much below $450/mt FOB due to high costs. One stated, however, “There is no indication that shows that the Chinese market will be up soon unless the Chinese government releases some good news to the market at the December meeting. Demand is not good in winter, and nobody wants to buy too much stock for this winter as was usual before.”
No new deals for Chinese 3SP billet have been reported since $463-465/mt CFR sales to Indonesia and the Philippines a week ago, while bids from Thailand have dropped to $450-455/mt CFR, which is assessed as being too low. Some market sources believe that new bids in Indonesia would be at $460/mt CFR, but Chinese mills will take some time to adjust costs first. The lowest offer for 5SP from a trader has been heard at $468/mt CFR Manila.
As for ASEAN steel mills, they have been keeping official offers at $470-475/mt FOB, but the Indonesian and Vietnamese sellers may agree on $465/mt FOB if there is a firm bid. But traders have not been active as it is too risky to take long positions now, considering the sentiment is still bearish.