Import billet prices for China up further amid surging futures, Jiangsu output controls

Thursday, 09 September 2021 17:34:29 (GMT+3)   |   Istanbul
       

Following the fresh announcement of controls of steel output curbs in China’s Jiangsu Province and sharp increases in futures prices, import billet prices in China have risen again in latest deals. Market sources believe that the uptrend may continue in the near future.

A deal for 30,000 mt of ex-Indonesia billet has been done at $710-715/mt CFR today, and another deal from the same producer has been reported at $715/mt CFR to another buyer in China. In addition, a Vietnamese producer has sold at $715/mt CFR to China with the volumes assessed at a minimum of 20,000 mt. The previous deals for ex-ASEAN billets to China were done at $700-710/mt CFR over the past two days, while on Monday the tradable level was $695/mt CFR confirmed in bookings.

Market sources report that, after the latest transactions, the allocations from these major mills from Indonesia and Vietnam have been fully sold out or “almost sold out” for November shipment.

Some suppliers have started to voice $720/mt CFR in offers today, but they have been cautious, expecting the market to show a further increase.

A contract for 10,000 mt of ex-Vietnam IF billet has been reported at $700/mt CFR China for November shipment today.

CIS-based mills have been interested in selling to China, and they are seeing the levels of $710-715/mt CFR as tradable for now, but the issue is the large allocation that needs to be shipped to China and high freight at up to $100/mt. One booking for ex-Ukraine billet was confirmed at $705/mt CFR earlier this week, as SteelOrbis reported yesterday, and another lot at the same price has been rumoured in the market, but this has still not been confirmed. A sale from Russia’s Far East was done at $700/mt CFR for 40,000-50,000 mt, also early this week.

Checks at steel mills in Jiangsu started on September 8 and the producers there will have to cut utilization rates to not above 50 percent in September-October to lower emissions and reduce energy consumption. “There is a rumour that Shagang and other steel mills in Jiangsu Province were told by the central government to cut production in September by 60-70 percent,” a trading source said, though no official announcement has been done.

Local billet prices from mills in Tangshan have increased visibly today after a stabilization on the previous day, reaching RMB 5,170/mt ($800/mt) ex-works, up by RMB 50/mt ($7.7/mt). This corresponds to $708/mt, excluding 13 percent VAT. As a result, the tradable level for import billet has exceeded $700-705/mt CFR seen a day earlier. Deals at even above $710/mt CFR have been considered as “reasonable”, taking into account that, apart from Hebei Province, severe production restrictions have been implemented in Jiangsu, another large production hub.

Moreover, rebar futures at Shanghai Futures Exchange have surged by 4.47 percent or RMB 243/mt ($37.6/mt) today to RMB 5,682/mt ($879.6/mt). Such a sharp increase following yesterday’s slowdown signals a positive outlook as production restrictions are unlikely to be eased soon, market sources believe.

China’s price will hit $720/mt [CFR] soon,” a large Chinese trader said, explaining the rising interest in import billet due to the production cuts, which have already started in September.

$1 = RMB 6.4615


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