Offer prices for steel billet imported into Southeast Asia have risen sharply over the past week despite more stable prices for cargoes sold into China, market participants told Fastmarkets on Friday July 24.
Chinese steel mills***
Chinese steel mills have continued to procure imports of billet over the past week but, unlike the preceding seven days, sales prices have stopped rising and have instead settled into a stable pattern.
China was providing an outlet for billet sellers at prices comfortably above those in Southeast Asia, where mills had been forced to raise their bid prices earlier in the week. But offer prices remained too high for most buyers in the region, which meant that no new deals were closed in Southeast Asia.
Fastmarkets’ daily price assessment for steel billet, import, cfr Southeast Asia, which mainly looks at 120-150mm 5sp grade billet sold into the Philippines, was $420 per tonne on July 24. This was unchanged day on day but up from $405-410 per tonne cfr one week before.
Offers of 5sp-grade billet to the Philippines were heard at $420-435 per tonne cfr on Friday from a range of origins. Japanese material was offered during the week at $430 per tonne cfr, while billet from Russia’s Far East province was offered at $420-425 per tonne cfr.
Even induction furnace (IF) billet from Asia, which is considered of lower quality than blast furnace (BF) material, was offered into the market this week at $420-425 per tonne cfr Manila, Fastmarkets heard.
Some sellers have taken a wait-and-see approach to the market following large volumes of sales to China in recent weeks, according to market sources.
Vietnamese billet offers were heard at a surprising price of $430 per tonne fob on Monday, up from deal prices of $426 per tonne cfr China in recent weeks. Moreover, one Far East Russian seller had ceased offering into the market over the past week, sources said.
In China, a mill was heard to have purchased 25,000 tonnes of Russia Far East billet at $412 per tonne cfr, while another deal saw a Chinese consumer buying 30,000 tonnes of Indonesian BF material at $426 per tonne cfr during the week.
Chinese buyers can pay more for billet from the Association of South East Asian Nations (Asean) because such material does not incur the 2% import duty collected on material from other origins.
All quiet on Asia’s Southeastern front***
The latest billet deals closed to the Philippines, earlier this month and in late June, were transacted at $400-405 per tonne cfr for BF-grade material, but such prices were now only a memory for consumers.
Most buyers in Southeast Asia raised bid their prices for 5sp billet to $410-415 per tonne cfr over the past week, from $400-405 per tonne cfr previously, market sources said, but the gap between bids and offers remained and made new deals fairly unlikely.
“Buyers are still expecting $410-415 per tonne cfr Manila, but this price is available nowhere in the market,” a Singapore-based trader said.
“Offers are all over the place but I have not really heard anything on sales yet,” an Indonesian trader said. “Indonesia and Thailand are still quiet. Both are struggling with sales of finished steel goods, let alone increasing their sales prices.”
Inventories are full at mills in the Philippines, reducing demand for new bookings, a trader from the country said.
But ultimately, the strength of China means that anyone else looking to buy billet must do so at China’s prices.
“I guess it is just a matter of time for customers to start paying higher prices – unless, of course, the markets correct or, worse, crash first,” a second Philippines trader said.
“[Sellers] are aiming for higher prices,” an East Asian trader told Fastmarkets, “but China is the best option for them.”
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