Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Billet prices in China have reached a six-month high. Prices in both, the domestic and import markets have been on an uptrend since February end. Strong demand recovery in the steel market driven by the construction sector led to an increased stocking of billets. Prices are likely to stay firm over this quarter on the back of the government stimulus package to help the economy.

China’s demand for billets has even aided Southeast Asian sellers to keep offers bullish despite weak demand in their respective domestic markets. 


Domestic billet prices rose $70/mt 

Chinese domestic billet prices rose from around CNY2,950-3,000/mt or $425-430/mt ex-Tangshan in February end to CNY3,400-3,450/mt or $495-500/mt ex-Tangshan in early August. Prices have increased by 15pc or by $70/mt. On Monday, billet prices in China were at CNY3,440/mt ($494/mt) ex-Anfeng. 


On Monday, sources informed 5sp 150mm billets traded in the range of $430-435/mt cfr China, up by $5-7/mt from the prior week. 

Late last week, Davis Index heard of two bulk import deals into China from India and Vietnam. Around 30,000mt of Indian 3sp billets concluded at $427/mt cfr China for September shipments, up by $3-5/mt early last week. For 5sp billets, prices are at $432/mt cfr China said a steelmaker in western India. The Chinese currency has strengthened marginally to CNY6.97 against US$1 from CNY7 levels in late July amid easing US-China tensions in July.

In the Philippines, importers reported limited buying interest due to stringent lockdown restrictions. Billet prices, however, remained firm despite limited economic activities. Indian and Vietnamese suppliers offered billet at $430-435/mt cfr Manila, at price levels similar to that by China. 

Rebar prices stay firm on infrastructural demand 

Chinese rebar prices have increased as sellers anticipate a revival of demand from buyers based in Hong Kong and Singapore. Prices for 16-20 mm diameter BS500 rebar were heard at $448-450/mt fob China on an actual weight basis. In the domestic market, Shagang steel held offers for 16-25 mm diameter HRB400 rebar at CNY3,780/mt ($543/mt) including 13pc value-added tax for early August shipments, up by CNY20/mt from the prior price levels.


Indian rebar exporters doled out offers of $445-450/mt cfr Singapore and $450-460/mt cfr Hong Kong on an actual weight basis. These levels were at least $15/mt from late July, following strengthening sentiments in the domestic market.  


Ferrous scrap prices find support 

Chinese steel scrap prices are likely to find support from strong international ferrous scrap and iron ore prices. In many provinces, flooding, and the resulting disruption in collection operation has tightened the supply of ferrous scrap. Prices, however, are likely to move sideways in the coming days as the rising raw material prices have pressured steelmakers’ margins. 

In the domestic market, HMS 6-10mm prices were in the range of CNY2,750-2,800/mt delivered mills. Shagang steel in eastern China has placed bids for 8mm scrap at CNY2,760/mt delivered mill, up by CNY60/mt from late July levels. 


On Monday, steel futures on the Shanghai Futures Exchange showed a marginal drop. Construction steel rebar contract for Oct 2020 delivery was down by CNY28 ($4) and opened at CNY3,816/mt. Oct 2020 contract for hot-rolled coils, mainly used in cars and appliances, dropped by CNY9 to open at CNY3,885/mt. Still, Chinese steel demand is expected to remain strong amid infrastructural push received from the government. 


Leave a Reply

Your email address will not be published.