Slab prices down, billet weak but stable

SteelOrbis Shanghai Due to the reduced export levels, Chinese slab prices continued to slide down over the past week, with conflicting trends seen in market quotations. Remaining stable in their weak state, billet prices indicated a downward movement for the future. On December 6, the price of common carbon billet in Tangshan, Hebei Province, was at RMB 2,740/mt ($350), while that of 20MnSi was at RMB 2,820/mt ($361) - equal to the level of the previous week. Meanwhile, the ex-factory price of slab from Laiwu Steel was down RMB 20/mt ($3) to RMB 2,850/mt ($364). With the decrease in CIS slab prices, exports from the CIS gradually gained in competitiveness in Southeast Asia. A Russian mill was heard to have exported slab to Taiwan at $440/mt CIF very recently, putting considerable pressure on China's slab exports. In particular, steel mills had to lower their ex-factory prices in the market in north China due to the continuing bearish demand along with the newly-increased production capacity. At present, quotations of slab producers in Tangshan have seen a general decrease of RMB 30-50/mt ($4-6) week on week to RMB 2,800/mt ($358). The southern market, however, appears in better condition. Hampered by difficult transportation conditions, it is impossible for northern supplies to flow into the southern market. Meanwhile the deman is strong and therefore the local markets enjoyed a good trading performance in medium plate and HR sheet. Also, due to low inventory, the rolling mills began to purchase slab in quantity. The billet market continued its stable trend with a normal trading volume being observed. However, due to the continuous decrease in long products and the narrow strip prices in the north, most rolling mills are standing aside now, showing caution as regards purchases. In spite of the unchanged mainstream price, the market has seen an increasing low-price offer trend. As regards the southern regions, the billet market resembles the slab market. However, with the sluggish trading on rebar, semis producers are mainly focusing on common carbon billet rather than on 20MnSi billet. Generally speaking, the downwards trend of the slab market and the stable performance of billet is unlikely to change in the short term. According to the statistics issued for China's semis exports in October, Taiwan, South Korea, and Vietnam were the three main destinations for exports. Semis exports to these locations totaled 190,865 mt, 182,596 mt, and 144,197 mt in the month in question. Meanwhile, cumulative exports in the Jan-Oct period for the three locations totaled 1.86 million mt, 1.161161 million mt, and 1.367485 million mt respectively. In addition, China's exports to Iran and Italy amounted to 78,901 mt and 30,197 mt in October, reaching 103,903 mt and 155,355 mt for the period from January to October. Breaking the above semis figures down into those for slab and billet , we see that the three leading destinations for Chinese slab exports in October were: South Korea (146,732 mt), Taiwan (97,515 mt), and Thailand (40,694 mt). For the period from January to October 2006, the three leading export destinations were: South Korea (714,246 mt), Taiwan (649,631 mt), and Thailand (485,751 mt). China exported totally 401,446 mt slabs in October and 2,873,198 mt through January-October. On the other hand, the three leading destinations for China's billet exports in October were: Vietnam (118,633 mt), Taiwan (59,528 mt), and Hong Kong (44,481 mt). For the period from January to October 2006, the three main destinations were: Vietnam (1.135242 million mt), Taiwan (613,092 mt), and South Korea (308,511 mt). China exported totally 327,710 mt billets in October and 2,898,303 mt through January-October.