Steel billet sellers are increasingly exploring options to sell material into Southeast Asia amid a lack of interest in imports from key buyers in China and the worsening Chinese port congestion.
Offers were heard at $735 per tonne cfr China for Indonesia-origin 3sp 150mm blast furnace (BF) billet on Friday October 15, while rising scrap costs have pushed Russia-origin offers up to as high as $750 per tonne cfr China and Southeast Asia, sources told Fastmarkets.
Vietnam-origin BF billet was heard offered at $680 per tonne fob on Friday, with an estimated $30-40 per tonne in freight costs.
But Chinese buyers said they were unable to pay close to these offer levels, with futures markets pushed down by expectations of higher production levels earlier in the week, with the modest gains on Friday unable to recover the early-week losses.
The latest deals heard done to China were for Far East Russia-origin BF billet at $710 per tonne cfr China late last week, and for Iran-origin material at $700-705 per tonne cfr earlier this week following sales by an Iranian mill at around $640 per tonne fob for three cargoes of 40,000 tonnes, sources said.
Fastmarkets’ price assessment for ۳sp-grade steel billet, import, cfr China was $700-710 per tonne on Friday, down $5 from $705-715 per tonne on Tuesday.
“The domestic market is dealing billet at around 5,200 yuan ($808) per tonne, which is about $700 per tonne [after value-added tax is deducted]. The market is quiet and we don’t see much buying interest,” a Chinese billet buyer source said.
“Now we will see international markets being stronger than China, whereas one month ago China was carrying the market,” a second billet buyer source said.
“I see scrap going up a lot, so I think Turkey and Ukraine, for example, won’t sell to China anymore,” he added.
Port congestion, weaker demand
A Chinese steelmaker source said he predicted Chinese billet buying prices would fall again next week.
“During the winter season, construction sites in China will be stopped from November-April so rebar demand will drop by 30-40% and northern China mills will sell rebar at cheaper prices to the south market,” the steelmaker said.
“So rebar prices will be lower and rebar manufacturers want to purchase billet at a lower price,” he added.
Manila is a better market for sellers than China now because discharging billet at Chinese ports is troublesome due to bad weather, a Vietnamese steelmaker source told Fastmarkets.
A Vietnamese trading source agreed, noting that many vessels were arriving at the same time at China ports, meaning there is congestion and many goods sitting around in the ports.
Problems at ports, including a lack of sailors to pilot ships down into river ports in China, has led to freight costs being, in some cases, up to $20 per tonne higher from some origins to China, compared with from the same origin to Manila, a Singapore trading source said.
Despite this fresh port crunch, sources said freight costs from eastern India to China were flat at $70-75 per tonne for 30,000 tonnes over the week.
Southeast Asia
Fastmarkets’ price assessment for ۵sp steel billet, import, cfr Manila was $705-720 per tonne on Friday, up $5-10 per tonne day on day from $700-710 per tonne cfr on October 14 after recent deals to the Philippines came to light.
A deal for Vietnamese modified high manganese 5sp billet was rumored to have sold at $735 per tonne cfr Davao earlier in the week, following offers for Vietnam BF billet at $740 per tonne cfr.
The deal could not be confirmed at the time of publication, but sources said that if it was concluded at this price, the deal would net back to around $720 per tonne on a cfr Manila, standard 5sp basis.
Sources said that this difference was based on higher handling costs in Davao port, the higher-quality grade of billet sold by the Vietnam mill and the possibility that the reported price contains 180 days financing cost and credit insurance.
Recent deals were also heard for Far East Russia-origin 100mm billet at $710-720 per tonne cfr Philippines.
A Philippine trading source said that a deal at $720 per tonne cfr was done for the Russian material earlier in the month, but that offers this week for January-shipment material of the same spec were heard at $710 per tonne cfr Philippines in the middle of this week due to the Russian export tax on billet being softened after December 2021.
A second Singapore-based trading source said the most recent deal he had heard for the 100-mm material was at $710-715 per tonne cfr Philippines earlier this week.
Other key market sources said that Philippine buyers are only interested in purchasing at $705-710 per tonne cfr Manila at a maximum on Friday amid the drop in China prices and plentiful cargoes in the market.
But the second Singapore-based trading source said these position cargoes are unhelpful to Philippine buyers given that they are mostly positioned to sell to China and therefore ordered in 150mm, 3sp spec, while most major Philippine buyers prefer 5sp grade.
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