The positive sentiment in the import billet market in Asia has been hit by the recent fall in domestic billet prices in China on Monday. Import activity has been halted as market participants are waiting for a clearer trend. As China was the main driver of prices in Asia, this will impact the tradable levels at least in the short term, SteelOrbis has learned.
Steel mills in Tangshan have dropped billet prices by RMB 140/mt ($21/mt) compared to the previous working day on Friday, April 9, to RMB 4,920/mt ($750/mt) ex-works on April 12.
The stockists’ price level in general in China has also declined, though in a slower pace, by RMB 90/mt ($14/mt) over the weekend to RMB 4,868/mt ($742/mt) ex-warehouse, according to SteelOrbis’ data.
The price decline has followed the announcement by Premier Li Keqiang made at a symposium late last week regarding the control of raw material prices to ease the pressure on end-users. This has impacted futures prices and overall sentiments in the market. Rebar futures at Shanghai Futures Exchange have lost RMB 101/mt ($15/mt) or 1.99 percent since Friday, coming to RMB 4,895/mt ($760/mt).
In addition, a new edition of capacity replacement plans will be effective from June, leading to more replacements and it will encourage EAF production instead of BOF-based capacities.
As a result of the recent futures and spot billet price drops in China, the import market has become stuck. “Sales stopped and I believe that there will be a pause this week,” a trader said. Ex-ASEAN billet sellers have been targeting $670/mt CFR in China after a number of sales at $660/mt CFR. But at the moment, the tradable level is not above $660/mt CFR, sources have said. Moreover, firm bids are expected to be closer to $650/mt CFR.
In the current conditions, the workable price for non-ASEAN billet in China, which is a subject for two percent import duty, is $645/mt CFR maximum, but mainly below, according to market sources, while the highest levels reached $650-655/mt CFR in deals from Russia last week.
In the longer term, the interest in imports in China will continue, sources believe, as the government’s aims to lower production and to cut emissions will remain in focus up to the end of 2021.