Prices for Asian billet have posted some slight decline compared to last week, mainly driven by the gradual decrease in Chinese futures prices and local Chinese spot prices, while ASEAN region-based mills are still less aggressive and are mainly watching further market developments.
The ex-China 3SP billet reference price has settled at $470-480/mt FOB, down by $5/mt FOB since late last week. “I agree that most offers have come back to $475/mt FOB from the previous $480/mt FOB. But what is even more important, some [traders] are going short,” a Chinese source told SteelOrbis, explaining the rather bearish market conditions. He also added that real demand and the production of billets in China have been playing a much bigger role for billet exports than iron ore price fluctuations. Another large Chinese trading source said that, if excluding short position offers, officially 5SP offers from China would still be at $480/mt FOB, translating to $500/mt CFR or above in Southeast Asia, but “I am not aware of any transactions,” he added.
Ex-Indonesia billet offers have remained unchanged at $485/mt FOB after the previous deals done at $480-482/mt FOB. “There is no need to change prices [for ASEAN mills] as futures prices are up this afternoon after the drop in the morning,” a source in Southeast Asia said.
As a result, ex-China billet prices have remained the most competitive in Southeast Asia’s import market. In particular, an offer for ex-China 5SP billet has been heard at $491/mt CFR Indonesia early this week, down from the lowest levels seen at $495/mt CFR for 3SP last week. “This is a really good price for the buyer. I don’t think that anyone can offer better,” a trader said. The indicative offer level for 5SP billet to the Philippines has also lost $5/mt, coming to $500/mt CFR Manila.
The current FOB prices would translate to around $515-525/mt CFR for the Turkish market, but there have been no reports about firm negotiations after a number of large lots were already traded to the destination in the previous three to four weeks.