Most major mills have been attempting to further push up billet prices in Southeast Asia this week, and, even though at least one deal has been signed at a higher level, in general these attempts have failed. Bids are still at lower levels and traders have resumed offering in short positions, which are strong signals that weak demand fundamentals will prevent the market from rising, SteelOrbis has learned on August 18.
A major Indonesian mill has managed to close a deal for a minimum of 10,000 mt of billet at $550/mt CFR Manila for prompt shipment. This has been the highest level fixed in a deal lately, taking into account that the tradable level was $535-545/mt CFR last week. But such a high level is connected with the prompt shipment mainly, according to sources. “I heard this was a trader covering a short position,” a source at an international trading company said.
Early this week, offers from the major ex-ASEAN producers for EAF/BOF billets have increased to $550-560/mt CFR and some even at $565/mt CFR, while last week most offers to the Philippines were coming to $540-550/mt CFR. But most customers said that the recent increase in offers is groundless. “Supplier mills have been losing money for quite a while now with high input costs versus low selling prices. Now they believe the market is coming back and want to increase prices to make a little profit or at least to break even. Personally, I doubt the sustainability of any price rally because China is intending to increase production again but demand is not increasing,” a Manila-based re-roller said. “The market in reality is having a hard time pushing up the price primarily because of demand,” another source said.
Another sign for the weak market conditions is the fact that traders have resumed offering in short positions. In particular, there have been reports about at least two small deals at $530/mt CFR for 3SP of open origin from traders to the Philippines. According to some sources, bids from customers in the Philippines are at $520-530/mt CFR for 3SP material despite higher offers from mills. “There is not much buying interest for 5SP material as all buyers have stocks,” a trader said.
Offers for IF billets have increased to $525-530/mt CFR this week after a sale for ex-Thailand billet rumoured at $520/mt CFR Manila last week.
In other Southeast Asian countries, demand for imported billets has also been limited. Ex-Iran billet offers from traders to Indonesia and Thailand have increased to $515-530/mt CFR, but buyers’ price ideas have remained at the level fixed in contracts in early August, at $500-505/mt CFR at the highest.
The SteelOrbis reference price for EAF/BOF imported billet in Southeast Asia is at $530-550/mt CFR this week, stable on average from last week, but the range has widened by $5/mt.