The sharp declines seen in futures and spot billet prices in China have resulted in a sharp fall in export offers for Chinese semis. This has put additional pressure on ASEAN mills’ offers, which, however, have still remained less flexible, at least so far.
Ex-China tradable 3SP prices have dropped to $520-530/mt FOB, down by $30-40/mt over the past week and down $20/mt since Friday. “China has fallen, and at this level you can easily find material, while from traders offering in short position you can find far below $550/mt CFR,” a trader said. The freight from China to Southeast Asia is around $20/mt, so the current FOB levels translate to $540-550/mt CFR. At the same time, there has been information about traders’ short sales at $530/mt CFR Manila. This means that traders expect that FOB levels from Asian mills will keep going down to $500/mt FOB or so.
The leading Indonesian mill has also cut its official prices - from $565-570/mt FOB to $545-550/mt FOB, but these levels have mainly been considered nominal as “there is no sense in offering at this level. No one will buy,” a trader said.
Average local billet prices in China have slipped to RMB 3,615/mt ex-warehouse, dropping by RMB 208/mt ($30/mt) over the past week, with the main decrease on Monday. This level translates to $465/mt, excluding 13 percent VAT. In these circumstances, the reference import price for billet in China has been lowered to $460/mt CFR, from $490/mt CFR last week.
$1 = RMB 6.8847