Prices for imported billet in Southeast Asia seem to have reached the bottom and are unlikely to post any further declines, since futures prices in China have rebounded and overall sentiments have improved.
A contract for ex-China billet done by a large trader has been reported at $590/mt CFR done late last week. This is slightly below the previous contract at $595/mt CFR for ex-ASEAN material reported last week. “The $590/mt CFR was the last one, nothing lower… The downtrend we are seeing in Southeast Asia is due to the lack of demand. Traders who were holding position cargoes were forced to unload, because offering at high prices would not work in the market. However, the recent conclusions of position cargoes are now gone. If we will do a cost calculation by using today's scrap or iron ore, we'll have FOB price of more than $600/mt,” a Manila-based trader said.
One of the main reasons why prices are going to increase or at least stop moving down in the near future is the change in the Chinese market. Local billet prices in China have increased after the hike in futures prices and so aggressive export offers have faded away. Early this week, some traders have been offering ex-China billet at $585/mt CFR Indonesia, but by Thursday offers have gone to $600/mt CFR minimum.
The SteelOrbis reference price for imported billet in Southeast Asia has settled at $585-595/mt CFR, versus $590-600/mt CFR last week.
Offers for ex-Iran billet have been reported at $580-590/mt CFR in Thailand and Indonesia, moving down from last week’s $590-595/mt CFR. Though $580/mt CFR is said to be workable for some customers, no new deals have been reported so far. In addition, at least one offer for ex-Russia billet has also been reported at $580/mt CFR. However, market sources believe that prices for ex-Iran billet may also move up on the back of the positive news seen in China.