Prices for local billet in China have declined even further due to slack demand and negative factors which have dampened the outlook for the near future. As a result, billet imports have remained halted with bids being far below the lowest possible offer in the market.
The average billet price in the local Chinese market has been at RMB 3,775/mt ex-warehouse, down by RMB 40/mt ($6/mt) over the past week, though up by RMB 15/mt ($2/mt) from the previous day. This level corresponds to $483/mt, excluding 13 percent VAT.
In these conditions, the tradable level for imported billet has settled at $480/mt CFR, stable from last Friday, but $10/mt below the level seen a week ago. Market sources said that the real estate industry has remained weak, which has exerted a negative impact on long steel demand and billet consumption as a result. The real estate market is expected to hit the lowest level in the fourth quarter, and so demand for steel may not show a traditional surge in autumn this year, some sources believe.
Moreover, China is still suffering from the Covid-19 pandemic and its consequences. Lockdowns in Chengdu and Shenzhen, and the earthquake in Sichuan Province have been affecting steel demand, even though the temperatures in China have become more favorable for construction activities. “As the profitability of steelmakers is low, if there is any, outputs should be restricted by the end of the year, the same as billet imports,” a trader said.
The latest offers for billet from Russia’s Far East region have been reported at $490-500/mt FOB, which is fully unworkable in China. Though ex-Iran prices are lower ($460-465/mt FOB), they have also been too high for Chinese importers, with freight and financing expenses added.
There has also been information that some importers in China have been assessing levels of $500-505/mt CFR, but, taking into account very low local billet prices, at these levels Chinese can buy only for future sales or for re-export.
$1 = RMB 6.9096