Sentiments regarding Asian billet exports have worsened this week as the expected rebound in local demand in China has failed to emerge and so traders have become more aggressive, offering in short positions as they believe the downtrend of prices will continue.
The reference price for ex-China billet stands at $425-435/mt FOB on October 14, down by $5/mt from the level seen late last week. “Mills’ offers from China are at $429-430/mt FOB, but traders are likely offering closer to $425-426/mt FOB,” a Singapore-based trader said. “I would say that $425/mt FOB is the lowest at the moment, but not many deals have been done yet,” a large Chinese trader said. A number of market sources in China confirmed that the market has been impacted by the slower-than-expected situation in the local market after the holiday. While usually local buyers resume strong purchases after the long holiday in early October, this year “China has not avoided the problem of high inventory and high output, so futures are falling and hitting a three-month low,” a China-based source noted.
The leading Indonesia mill has offered at $432/mt FOB for December shipment, down slightly by $3/mt from late last week. An official offer from Vietnam has been reported at $440-445/mt FOB with “obviously zero traction”, a trader commented.
The lowest Asian billet prices have been seen by traders, who have started to actively offer in short positions. In particular, offers for Chinese 3SP billets in Southeast Asia have been reported at $440-445/mt CFR, which is $5-10/mt CFR below the lowest level seen last week. “Yes, this is aggressive, meaning no one believes that a rebound will happen [in China] soon. But buyers hesitate,” an international trader said. Also, buyers from the Philippines and Thailand have received offers for 5SP billet at $445-450/mt CFR, while the previous deals for this grade were at $455-460/mt CFR. “Demand is really bad and bids will fall further,” a Manila-based source said.
In another major outlet for Asian billet, the MENA region, no new deals have been reported so far either, and more aggressive offers are awaited. The latest firm offers for Chinese billets to Turkey have been at $465-468/mt CFR, while the previous sale done to Saudi Arabia at least ten days ago at $457/mt CFR has already been done by a trader in a short position. The freight to Saudi Arabia is estimated at $35/mt at best, so the FOB price should be below $422/mt for a trader.