The market for cargoes of Southeast Asia billet expanded again over the past week, with suppliers raising their offers, influenced by higher finished steel prices in China.
*** China’s domestic rebar
China’s domestic rebar prices jumped to a two-year high on Tuesday thanks to strong construction demand and falling steel stock levels in the country.
Chinese traders have slowed down their purchases of steel billet in recent days, but last week concluded orders for induction furnace billet from Vietnam at $472 per tonne cfr and for blast furnace billet from Indonesia at $475 per tonne cfr.
Last week’s deals led to major suppliers to raise their offer prices to Southeast Asia, insisting that consumers in the region match prices paid by China if they wanted to obtain any material.
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 $475-480 per tonne cfr on November 18, up $5 per tonne from $470-475 per tonne cfr day on day and up $15-20 per tonne from $455-465 per tonne cfr week on week.
*** Southeast Asia billet , Gulf Co-operation Council (GCC)
Offers from the Gulf Co-operation Council (GCC) region in the Middle East came in at $450 per tonne fob, or $480 per tonne cfr, Southeast Asia on Monday, a steelmaker source in the region told Fastmarkets, with offers from the Black Sea region of Russia heard at the same prices.
The only outlet where Southeast Asian buyers have been able to achieve lower prices in the past week is from Iran, with buyers in both Thailand and Indonesia heard closing deals at $455 per tonne cfr from the Middle Eastern country.
*** Southeast Asia billet , Russia
A deal for Russian billet was closed at $460 per tonne cfr Philippines early last week also, while a transaction for UAE and Omani billet was said to have been done at $469 per tonne cfr Philippines last week, although this deal could not be confirmed at the time of publication.
Bids were heard at $470 per tonne cfr Manila earlier this week for 5sp billet from Russia’s Far East region, but the selling mill did not accept the bid, a Philippine trader said.
***Playing catch-up
Despite consumers in Southeast Asia being unable to keep pace with current offer prices for non-Iranian material, these prices are likely to keep rising in the short term, sources said.
“This week, prices are still firm and suppliers want to go even higher than $480 per tonne cfr Philippines,” a second trader from the Philippines told Fastmarkets.
“It appears China will continue to buy billet, so sellers are not afraid to back out of a deal or go higher on prices into Southeast Asia. Even if Manila will not buy at these prices, [the sellers] think China will,” he said.
*** Southeast Asia billet , Philippine market
One major issue for buyers in the Philippines is the limited demand for long steel in the country, particularly when compared with China’s ravenous appetite for the material.
“The Philippine market is soft on the demand front, with Covid-19 cases and the lockdown periods leading to an 11% decline in GDP in the third quarter of this year,” the trader said.
“Construction is the largest [part] of the Philippines’ economy, so this decline is significant for steel demand,” he added.
Although demand is poor, the presence of China in the market would ensure a continuation of higher prices, sources said.
“The market price level is around $480 per tonne cfr Manila now and I don’t think anyone will offer below this price,” a third Philippines trader said.
“Some suppliers who deal in smaller billet sizes may have to accept less than this, but for larger and standard sizes, they can sell easily at $480 per tonne cfr,” he added.
A trader based in South Asia said: “There is no cheap cargo available and, frankly, Southeast Asia has to move up next week.”
***price assessment for steel billet
But a second South Asian trader said he did not believe mills would meet the current offer prices unless they “desperately need the cargo”, and highlighted the slight drop in the local Tangshan billet price late last week as evidence that the Chinese market was losing momentum.
After a small decline on Friday, Fastmarkets’ daily price assessment for steel billet, domestic, exw Tangshan, Northern China, had bounced back to 3,600 yuan ($548) per tonne by Wednesday, up by 20 yuan per tonne week on week and day on day.
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