Bearish sentiments have prevailed in the Asian billet market. After a big drop in Chinese rebar futures prices late last week, they have posted a rebound on Monday and Tuesday, but this has provided little support for local spot prices and imports are expected to remain halted in the near future due to buyers’ price ideas which are still very low, SteelOrbis learned from the market on July 19.
The average local billet price is at RMB 3,668/mt ex-warehouse on July 19, up by RMB 13/mt ($2/mt) on July 19, but down RMB 257/mt ($38/mt) over the past week. This price level corresponds to $481/mt, excluding 13 percent VAT.
The tradable import price has remained at $480/mt CFR on average, stable from last week. But sources have pointed out that, while most bids were hardly above $450/mt CFR last Friday, after some improvement in futures prices customers can consider $480/mt CFR. “Futures firmed up on Monday, so the billet price can also increase slightly, but who [from foreign suppliers] can provide $450/mt CFR or $480/mt CFR?” a Chinese trader said. “Demand is so bad, and this is a reason for the huge drop [seen last week]. Maybe the situation will be a bit better in the coming weeks as mills are suffering from losses and will cut production,” another source said.
Offers for ex-Russia billet have not fallen below $500/mt CFR, while the lowest ex-ASEAN billet offers have been heard for IF material at $510/mt CFR. Import prices have not been workable in China.
Weak market conditions in China have been putting pressure on the Southeast Asian billet market. For instance, offers for ex-Indonesia billet have been heard at $540/mt CFR Taiwan this week, versus the lowest traders’ offers at $550/mt CFR last week. Also, sources see a mill’s offer at $550-555/mt CFR Jakarta in the local market. Last week, the tradable level for imported billet in Southeast Asia was at $550-570/mt CFR, but this week market sources expect the market to slip to $540-550/mt CFR as for BF/EAF billets. At the same time, cheap IF billet prices have been heard in the Philippines - from $545/mt CFR last week they have fallen to $525-535/mt CFR with one deal rumoured at $525/mt CFR for ex-Vietnam IF billet. The new level for IF billet has been discussed at $510/mt CFR, but this could not be confirmed by the time of publication.