Asian billet prices have come under pressure as China, a major consumer has lowered its imports. Demand in China has slowed ahead of the summer months when construction activities remain sluggish, with a ripple effect on billet imports into Southeast Asia.
Prices also declined on the back of a fall in global ferrous scrap prices.
Additionally, in Taiwan, Thailand and the Philippines, dragon boat festival holidays from June 25-28 also impacted trades.
Davis Index sources informed there were only two bulk deals reported in Thailand and the Philippines last week compared to the usual four to five. Indian steelmakers sold around 60,000mt of billet at $400-405/mt cfr Southeast Asia and Taiwan. Offers of $410-415/mt cfr in the week ending June 20 were not accepted by buyers.
Billet offers from a major Iranian steelmaker too fell by $10-15/mt to $370-375/mt fob Iran or equivalent to $395-400/mt cfr Thailand in a week as market sentiment weakened in Southeast Asia and China. Chinese domestic billet prices on June 29 remained unchanged at CNY3,320/mt ($470/mt) ex-Tangshan plant.
Raw material prices on a decline
Iron ore prices are expected to soften in the July-Sep quarter from the present $100-103/mt cfr China. Thus, margins for steelmakers in China are expected to improve with a drop in input cost. Market sentiment in China is mixed with some expecting demand to be healthy in the infrastructure and real estate sector. But a few expect demand to remain tepid.
Weak semi-finished and finished demand weighs down ferrous scrap prices
Over the last one week, imported ferrous scrap prices in East Asian and Southeast Asian countries dropped by $10-15/mt. A major supplier country Japan’s ferrous export prices to recorded a steep decline amid weakened demand in South Korea, Vietnam and Taiwan.
In Taiwan, imported and domestic ferrous scrap trades remained amid dragon boat holidays. Prices for US-origin HMS 1&2 (80:20) in containers were at $240-242/mt cfr Taiwan, down by $8-10/mt from the prior week.
In Vietnam, weak finished steel demand hit trades and prices for imported ferrous scrap. Japanese suppliers lowered offers for #2 HMS in bulk cargoes to $260-265/mt cfr Vietnam and buyers were at $250-260/mt cfr Vietnam.
The spread between billet and HMS scrap remains at $125-135/mt. But due to the ongoing summer season, billet and ferrous scrap trades are slow. Davis understands a few Vietnamese mills purchased billets last week after prices declined and are waiting and are waiting for a further drop in the prices in the coming days.