October 07, 2008

Chinese domestic billet price continue to rise

It is reported that billet prices have hit record high in China, bolstered by rising raw material prices. On Tangshan market, Q235 150mm and 20MnSi 150mm billet prices climbed to CNY 3750 per tonnes and CNY 3780 to CNY 3820 per tonnes, up by CNY 50 per tonnes and CNY 30 per tonnes respectively.

The billet market is in a cost push environment in which producers are seeking to offset higher costs including continuous increase in iron ore and coke prices. On the other hand, the release of steel re rolling capacity is putting strain on billet supply.

If Q235 150mm billet prices could remain above CNY 3700 per tonnes, it is going to approach CNY 3900 per tonnes or even higher. However, whether domestic billet prices could keep going on depends on the real demand. Some market players indicate that many Tangshan based small steel makers have halted operation due to high production cost. Thus it would probably case adverse impact on billet demand. In addition, such high market prices also are likely to dampen buying sentiment.

Export prices keep firm at about USD 580 to USD 585 per tonnes FOB and they are expected remain strong due to high domestic prices and great overseas demand. Perhaps 350 thousand ton billet/slab exports for September shipment could prove how strong the demand, even at record high export prices.

Traders in SE Asia said that customers will be in the market by end November by which time they have to buy for December/January 2008 shipment for early 2008 requirements. Current workable import prices are said to be at about USD 570 to USD 580 per tonnes CFR. In addition, inventory level in SE Asia is lower than common level and users have to buy sooner or later. However, Malaysia and Taiwan cannot fill in the vacuum left by China. Thus billet export price ex China are anticipate to remain strong in the remaining days of 2007.

(Sourced from Mysteel.Net)