The Chinese billet market has been in free fall, resulting in an extremely bearish mood in the billet market in the Asian region. The leading Indonesian mill has followed the trend to keep the gap with ex-China billet at not more than $5-10/mt.
Ex-Indonesia billet offer prices have dropped by $10/mt over the past week to $450/mt FOB. A deal for at least 40,000 mt was done at this level late last week and market sources believe it was done by a trader to cover its short position. Also, this week, traders have been testing the market with $445/mt FOB for ex-ASEAN billets.
Ex-China 3SP billet prices have been corrected down further, settling at $435-450/mt FOB, down by $5/mt on the lower end from yesterday and down $10/mt since late last week. Most negotiations have been heard at $435-440/mt FOB today, though some mills have left their indicative offers at $450/mt FOB, which is already considered to be too high and unworkable for Chinese billet. “China’s local billet price [in Tangshan] is down to RMB 2,980/mt ex-works now [down RMB 40/mt from the previous day]. That's like $427/mt FOB... this is insane,” a Singapore-based source said. Another trading source said that he expects buyers may start purchases, especially those from Asia.
In Southeast Asia’s import market, buyers have been assessing the current market conditions. The new reference price for 5SP billet to the Philippines has been assessed at $465-470/mt CFR, versus $471-475/mt CFR offers last week. “Traders have started fishing, but buyers may not see these levels yet. The market is dropping every day,” a local source said. Also, in Indonesia, 5SP offers for open origin are at $455/mt CFR, down by $10/mt from last week. “Maybe 3SP is $5/mt lower, but we need to wait to see CFR prices after the drop in FOB market,” an international trader said.
As for the Turkish market, the tradable level has been at $475-490/mt CFR for Chinese and Indonesian origins, while the previous deals were at $485-490/mt CFR for ex-China material. “That price [$475-480/mt CFR for Chinese origin] today is absolutely possible. I’d say even easy from the sourcing side. So, this will put further pressure on scrap,” another large trader said. Last week, a deal for 40,000 mt of a mixed cargo of billet and slabs was done from Malaysia to Turkey with the billet price reported at $505/mt CFR, while slabs were assessed at $510-515/mt CFR. The higher deal price is due to the absence of duty on Malaysian semis.