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Traders observe Chinese return in softening billet market

Posted on 10 February 2021

A recent Indian billet export tender reflects continued price weakness, Kallanish notes. Amid the Asian market downturn, traders are gearing up for China's re-entry into the market.

An Indian mill awarded two billet cargoes at the same price of $515/tonne fob India. One was for 160x230mm bloom and the other for 150mm square billet. A trader reports hearing the bloom is destined for the Thai market. Freight from India to Thailand had previously cost around $25/t but is expected to be higher now because of rising international freight costs. 

The Indian mill was heard last Friday to be in negotiations with buyers for this billet cargo, which is due for end-March shipment. At that time, some traders were believed to be soliciting for bids for 16,200-18,900 tonnes of the mill's billet at $535/t cfr Manila.

Meanwhile, traders in Southeast Asia report that China bought regional billet last week. Some traders heard that Indonesian and Vietnamese blast furnace billet was sold at $530/t fob, which would be equivalent to $540-545/t cfr China. A Vietnamese exporting mill last week sold 20,000t of 3sp 150mm square March-shipment billet at $530/t fob, a Vietnamese trader reports. He estimates freight at around $10/t.

A Thai trader reports at least two traders sold last week at $543-545/t cfr China. Other traders reported on Friday that the workable price for ASEAN billet was $530/t cfr China. But Chinese trading sources said then that buyers were generally aiming to book at $510-520/t cfr China for back-to-back spot deals.

The domestic billet price in Tangshan rose by CNY 100/t ($15.5/t) to CNY 3,950/t on 9 February. This is equivalent to a break-even value for billet imports of $535/t cfr, Chinese trading sources estimate. Imports need to be at least $5-10/t lower than the local billet price to be profitable, a Chinese trader says. Some traders may be bidding higher however in expectation of higher prices by the time shipments are delivered. ASEAN billet prices, which enjoy zero import duty, are currently too high, he adds.

Source : Kallanish