Posted on 27 Aug 2021
The narrow gap between Chinese and international prices of billets, plus longer shipment periods, are dampening the interest of Chinese importers in buying steel semis recently, resulting in slack trading, market sources indicated on August 25.
“The market has been so quiet this week and there is almost now booking interest at all,” a steel trader based in Hongkong observed.
Most Chinese buyers are looking for billets priced at below $660/tonne, with some eyeing $650-648/t – a range unacceptable to overseas sellers, according to him. The tradable price of 5SP 150mm square billet from Vietnam was at $665/t for October shipment as of August 24, according to Mysteel’s assessment.
But in the meantime, PT. Dexin Steel Indonesia was heard offering billets to China at $670/t CFR on Tuesday, two industry sources shared.
“I’ve hardly heard of any deal, and the current offers don’t seem to be attracting Chinese importers, given the narrow price gap and recent weak sentiment in the domestic market,” a Shanghai-based market source commented.
In China’s domestic market on August 24, the Tangshan Q235 150mm square billet price was Yuan 4,930/tonne ($761/t) EXW and including the 13% VAT, or around $674/t EXW and excluding the VAT.
Uncertainties over shipping is another major concern for Chinese importers, the sources maintained.
China has tightened controls on overseas shipments to the country due to the resurgence of COVID-19 cases in and out of China, resulting in serious congestion at major steel trading ports, a Beijing-based steel trader pointed out.
For example, since the beginning of August, Jiangyin port and a few other major ports for billet imports all in East China’s Jiangsu province have tightened checks on shipments from India, Russia, Thailand and Vietnam.
“Shipments from Vietnam can normally arrive and clear Customs within six to seven days but because the congestion, the period has extended to at least 14 days – with freight costs soaring as a result of the delays,” the Shanghai source also noted.
“Shipping issues are adding to the risks of import billets to sell in the domestic market, considering the market situation,” a steel trader based in East China’s Zhejiang province agreed. But importing products for hedging in the futures market is still doable at the moment if managed properly, as physical shipment delivery is less of a concern for such business, he said.
Source:Mysteel Global
