The downtrend in the Chinese billet market has been reversed today, September 24, after China’s central bank cut the RRR and a number of important stimulus measures were announced to boost the property market. The positive sentiments are likely to continue in the Asian billet market for some time, so ASEAN mills have announced new offers at higher levels, especially after they signed deals for December shipment last week and so they are not under pressure from inventories.
The ex-China billet reference price has increased by $10/mt today, coming to $435-445/mt FOB, in line with the level last Friday. “Most offers are at $445/mt FOB from today after the rise in futures prices. Trading is halted,” a major Asian trader said. “Today, I think most Chinese offers are withdrawn due to the strong policy support announcements,” another trader said. On September 24, the People’s Bank of China announced that the reserve requirement ratio (RRR) for Chinese banks will be cut by 0.5 percentage points, while a number of new measures have also been announced to support the real estate market, like lower housing loan interest rates for existing home sales and a cut in the minimum downpayment ratio.
The positive sentiments in China have boosted the mood among ASEAN mills. The main Indonesian producer has increased its offer price for its 3SP billet by $5/mt compared to last week to $445/mt FOB. At the moment, most of its offers are for January shipment. A number of deals for ex-Indonesia billet for December shipment were heard at $442-444/mt FOB over the past week. One source said that traders took positions “mostly for local [Indonesian] and distant markets.” Another source confirmed that from 10,000 mt to 40,000 mt were for further sales to Turkey, while at least one lot of 20,000 mt was for the Philippines. Also, “Dexin’s billet casters will undergo maintenance at the end of November-early December, so production has been pushed back,” a Singapore-based trader said.
A deal for billet from one of Malaysian producers has been reported at around $450-455/mt FOB for 50,000 mt, with the expected final sales destination being Turkey.
In Southeast Asia’s import billet market, ASEAN mills have been less competitive lately, but after the recent Chinese rebound this has changed. Offers for 3SP billet in Indonesia have increased by $10/mt today to $455-460/mt CFR. The tradable level for 5SP billet in the Philippines is at $465-470/mt CFR, up by $5/mt from last week.