The bearishness in the Southeast Asian billet market has been increasing over the past week with traders going short and some Asian mills also forced to cut prices on the back of poor market conditions. As a result, some deals have been done to Southeast Asia at much lower levels, though overall demand has been far from firm.
The lowest deal signed in the Philippines this week was for less than 10,000 mt of ex-Japan 3SP EAF billet at $505/mt CFR, according to a number of market sources. “Considering the scrap price in Japan, $505/mt CFR is very doable,” one local trader said. “The market is really very bad in general. We had a strong earthquake yesterday with 7.2 magnitude,” another source from the Philippines said.
In addition, there have been rumors in the market that traders have been offering ex-ASEAN BOF/EAF billets in short position at $510/mt CFR, while last week the lowest position offers were at $530-535/mt CFR. One source has said that a few traders’ position deals have already been done at $505/mt CFR for 3SP billet and $515/mt CFR for 5SP billet. Though this could not be confirmed by the time of publication, another source has also heard of these negotiations and said that at least one deal was for Indonesia. But “most buyers are still afraid [to buy in the falling market],” he added.
At the same time, there has been some reduction in mills’ offers too, though not as sharp as that from traders. A Malaysian BF-based mill has offered at $530-545/mt CFR Manila, while a major Indonesian producer has been asking for $530-535/mt CFR in the Philippines and $520-530/mt CFR Jakarta in the local market. Though some sources believe that it is possible to get $520-525/mt CFR from Indonesian mill for 3SP billet, without dealing with traders. Last week, most mills’ offers to the Philippines were at $545-550/mt CFR Manila.
Offers for ex-Thailand IF billet have been at $505-515/mt CFR in the Philippines this week, though no deals have been heard.
Despite weakened sentiment, offers for ex-Iran billet from traders have remained at $520/mt CFR Indonesia and Thailand.
The SteelOrbis reference price for imported billet in Southeast Asia has been lowered to $505-530/mt CFR with the midpoint at $517.5/mt CFR, which is $22.5/mt below the level reported last week.
The gap between tradable levels for billets in China and Southeast Asia has narrowed much recently. At the moment, the reference price for imported billet in China has been at $480-490/mt CFR, up from $480/mt last week, amid some increases in the local market. So, the gap is now only $30-35/mt, though it was $60/mt just last week. “It seems prices just keep coming down in the ASEAN region, whereas China’s futures prices are somehow moving up,” a Singapore-based trader said.