The bearishness in the Asian billet market has only worsened over the past week as the local Chinese billet and rebar markets have been heading towards new lows and iron ore has been touching $100/mt CFR. ASEAN mills have also been more flexible, according to market sources.
The ex-China 3SP billet reference price is down $5/mt from yesterday, July 22, and late last week to $465-470/mt FOB. A few traders confirmed that $465/mt FOB has started to be available from some mills today, July 23, “after iron ore was down by another three percent today [at SGX to $100.35/mt],” a source said. The average local billet price in China is down RMB 20/mt from yesterday, coming to RMB 3,248/mt ($455/mt) ex-warehouse, mainly due to weak demand and falling rebar spot and futures prices. Traders may start to take positions from Chinese mills again shortly after the recent decline and $460/mt FOB is expected to be achieved, a number of sources polled by SteelOrbis believe.
“Demand [for rebar in China] is declining and daily rebar trades are continuously below 100,000 mt… The rebar standard shift is negative for supply,” a Chinese trader said. Chinese stockholders actively try to sell the old standard rebar, which will become unsellable as the new standard kicks in on September 25.
The bearish mood in China has resulted in more position sales by traders. For instance, late last week, up to 20,000 mt of ex-China 3SP were sold at $485/mt CFR to Indonesia. “This price is reasonable for today,” an importer in Jakarta said. In addition, ex-China 4SP billet has been sold at $482/mt CFR this week, while last week the same grade of ex-Japan material was traded to Thailand at $500/mt CFR. Negotiations for 5SP billet have been held at $490/mt CFR in the Philippines this week, though no new deals have been confirmed so far, versus offers at $495-500/mt CFR last week.
In this general situation, the pressure on ex-ASEAN billet prices has intensified. The ex-ASEAN billet reference price is at $465-475/mt FOB, versus $472-480/mt FOB last week. After a deal for 40,000 mt of ex-Vietnam billet was done at $472-475/mt FOB, no new transactions have been confirmed, though rumors have spread about an ex-Indonesia sale at $475/mt FOB also last week. As of yesterday, some buyers have started to receive $465/mt FOB from the Indonesian mill, though the producer is officially offering at $475/mt FOB and has confirmed that counterbids are $10-20/mt lower this week.
A sizable tonnage of ex-Indonesia billet has been sold at $515/mt CFR to Turkey lately, down by around $5/mt from offers seen last week. This happened after 150,000 mt of ex-China billet were sold at $508-517/mt CFR to Turkey, but now the tradeable level for Chinese origin would stand at $500-505/mt CFR.
$1 = RMB 7.1334