The sentiment in the import billet market in China has remained positive early this week as the rebar market has been showing improvement and a number of provinces announced production cuts in the second half, which supported prices.
One deal for an estimated tonnage of 20,000 mt of ex-Vietnam BF 5sp billet has been heard at $725/mt CFR lately, being the highest level in the market for now, while late last week deals for ex-ASEAN billet were reported at $715-718/mt CFR China. “I believe that the general level for base 150 mm billet has reached $720/mt CFR,” a trader said, adding that the higher price in this contract reflects the positive outlook for the further increases soon.
Another deal for 24,000 mt of ex-Far East Russia 125 mm billet has been rumoured at slightly below $715/mt CFR. The lower price level has been explained by market sources by uncommon size for the Chinese market. “125 mm [billet is] not popular in China unless it is cheap,” Chinese trader said.
Local billet prices in Tangshan have increased by RMB 40/mt ($6/mt) from Friday to RMB 5,240/mt ($809/mt) ex-works, which translates to $716/mt, excluding 13 percent VAT.
The tradable price level for import billet in China was at $710-720/mt CFR last week with most deals done closer to the lower end of the range, while for now the workable price is at $716-720/mt CFR and even slightly above, SteelOrbis has learned.
The major reason, pushing up billet prices in China, is improvement in the rebar market. Average rebar price in China has added RMB 73/mt ($11.3/mt) since Friday, reaching RMB 5,413/mt ($836/mt) ex-warehouse, according to SteelOrbis. On July 26, rebar futures closed at RMB 5,687/mt ($879/mt) at Shanghai Futures Exchange, up RMB 255/mt ($39.4/mt) from that recorded on July 19, while up RMB 25/mt ($3.8/mt) from the previous trading day.
Late last week steel enterprises in Jiangsu and Shandong provinces received notice from the provincial governments to require them to control the steel output so as not to exceed the volume recorded last year. As a result, crude steel output in Jiangsu will be cut by 8.12 million mt in the second half of the current year, while in Shandong production should be reduced by at least 7.65 million mt.
$1 = RMB 6.4763