A barrage of import steel billet deals have been concluded with Chinese buyers this week at progressively higher prices, sources told Fastmarkets on Friday July 23.
Demand for imported billet has spiked at mills in China amid targets which would push down steel production in the country over the second half of 2021.
Chinese steelmakers can use import billet to roll long steel products while simultaneously reducing their liquid steel production.
Fastmarkets’ price assessment for steel billet, import, cfr China was assessed at $705-718 per tonne cfr China on Friday, up by $2-3 per tonne from $703-715 the previous week.
Deals at the start of the week were $660 per tonne fob for 10,000 tonnes of Thailand origin, 3sp electric arc furnace (EAF) billet, equivalent to $705 per tonne cfr China.
A lot of 5,000 tonnes of 3sp Japan-origin billet was sold to a Chinese trading house at $715 per tonne cfr China, but sources said the shipment was for October arrival so it was not included in Fastmarkets’ price assessment.
A deal for 3sp Indonesia-origin blast furnace (BF) billet was heard at $713-715 per tonne cfr China this week, while 3sp Vietnam-origin BF billet was sold at $715-717 per tonne cfr. A deal for India-origin 150mm 3sp BF billet was heard at around $707-710 per tonne cfr.
At least two tenders for 30,000 tonnes of Indian BF 3sp billet were closed this week at $633 per tonne fob, with one of the two believed to be heading to China and the other to either Sri Lanka or the United Arab Emirates (UAE).
Malaysia-origin BF billet was heard sold at $718 per tonne cfr China, although one trading source said he believed the cargo was destined for the firm’s parent company in China, so the price may not be a representative market level.
An offer from Russia was heard at $723-724 per tonne cfr China this week for a prompt shipment, although no deals were confirmed. Offers from Indonesia for 3sp BF billet with September shipment were heard at $720-730 per tonne cfr earlier in the week.
Strong futures prices support spot market
Although ferrous futures markets are strong in China, sluggish domestic billet prices may restrict further price increases in the short term for imports, a China trader source said.
With Chinese futures market prices higher than the local spot market, importers can accept import prices being slightly higher than the domestic market, although import prices still should not be too high, the source said.
“Also, many big traders already have a certain number of positions in hand, so they are not in a hurry to buy more if the price is not attractive,” the trader added.
A second trading source told Fastmarkets he had “so many contracts and [he] can’t handle all of them.” after a round of buying this week.
The most-traded Chinese October rebar futures contract closed at 5,671 yuan ($877) per tonne on Friday, up by 23 yuan per tonne from a day earlier. That compares with spot rebar prices of 5,280-5,300 yuan per tonne in eastern China.
“Now China is starting to stock up and they want billet because of the production cuts in the second half of this year so I see prices continuing to bounce up,” a Singaporean billet trader said
Southeast Asia weak
Continuing difficulties with the Covid-19 pandemic across Southeast Asia have negatively affected demand for steel billet, sources said.
With demand low and offer prices rising due to Chinese buying, any consumers in the market have focused on the cheaper induction furnace (IF) billet, which is avoided by many Chinese buyers due to quality concerns.
A deal for Vietnamese induction furnace (IF) billet was heard at $688 per tonne cfr China in the week, while offers for Thai IF billet were heard at $685-690 per tonne cfr earlier in the week.
Offers for Indonesian 5sp BF billet were heard at a minimum of $725 per tonne cfr Manila in the week, while Indian billet was on offer at no lower than $715 per tonne cfr.
A Philippine steelmaker was heard to be in the market bidding for small quantities of 3sp billet at just below $700 per tonne cfr on Friday, but no deals were heard to be done.
On the other hand, a Russian seller source told Fastmarkets that China was “setting the price” and therefore the Manila market must pay at least $715 per tonne cfr for 5sp billet.
Fastmarkets’ daily price assessment for steel billet import, cfr Manila assessment was at $700-715 per tonne, unchanged day on day and up $5-10 per tonne from $695-705 per tonne one week before.
“Philippine steelmakers and stockists have been very careful with their [billet] purchases, with mainly just-in-time deliveries from nearby sources due to volatile prices,” a Philippine trading source said.
A more stringent lockdown in the country was now possible again given the “surge of the Covid-19 delta variant,” which will further reduce import billet demand, the source added.
The rapid spread of Covid-19 across Indonesia has halted interest for import billets, a South Asian trader said.
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