Increase in demand leads to tight supply for Chinese billet

Thursday, 07 September 2006 11:47:15 (GMT+3)   |  
       

SteelOrbis Shanghai It seems that, the brisker demand at home and abroad has tightened Chinese billet supply last week. Some steel mills did not accept new orders, because they have filled the order books. Chinese billet demand saw a remarkable rise through the last seven days week. The exports still maintained the roaring trading volume, and the rapid expansion in domestic demand boosted up domestic market prices. On the exports side, with the rainy season in Southeast Asia coming to an end, inquiries from abroad increased sharply. Furthermore, in addition to the steadily climbing trading volume, Chinese billet prices rebounded after having touched the bottom in August, leading to the rise in export quotations from semis producers. At present, the mainstream export quotation of common carbon billets is at $380-390/mt FOB, up $5-10/mt compared with the previous two weeks. On the domestic side, many steel mills announced their ex-factory prices for September in the previous week. In particular, the price hike of long products announced by the five leading mills in Northern China fuelled the long product price rise in Northern China and even the whole country. On September 6, the price of common carbon billet in Tangshan, Hebei Province increased RMB 40/mt ($5) week on week to RMB 2,850/mt ($359), that of 20MnSi increased RMB 50/mt ($6) to RMB 2,920/mt ($368). Laiwu Steel kept its ex-factory price of slab unchanged at RMB 2,900/mt ($364). Rolling mills are quite optimistic about the future, so they increased their billet purchases, causing to the currently tight billet supply in all regions. The production plans for September of Shandong Rizhao and many other steel mills have already been fully scheduled; therefore, they can not accept any other orders. Billet producers are also optimistic about the future of the market, and they are not willing to set the prices for October according to the present market price level as they think the prices may go up further. Therefore, most mills will not accept orders for October until late September. In the current Chinese semis market, the expansion in trading volume caused the semis producers to hike the ex-factory prices. Meanwhile, rolling mills are worry about further rise in billet prices; therefore, they are increasing the purchase, which again pushes up the semis prices. Chinese steel market is in the beginning of the upward trend yet, and finished steel prices are expected to keep going up. Therefore, the current upwards trend of the semi-finished market will last for some more time.

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