Southeast Asia's billet prices slip on trade war fears, subdued demand

Fears of a trade war between the United States and China coupled with weaker pre-holiday demand led to prices for billet in Southeast Asia weakening over the past week, though those for slab appear to have been insulated from these factors as a result of thin trading.

Billet
Metal Bulletin’s assessment of import prices for billet in Southeast Asia was $550-565 per tonne cfr for the week ended Monday March 26, down $5-10 per tonne cfr from a week earlier.

Buyers in the Philippines booked cargoes of Chinese materials at $555-565 per tonne cfr sometime in the middle of last week, sources said.

But toward the end of last week, offers for these products in the archipelago fell to $530-540 per tonne fob China - about $550-560 per tonne cfr Southeast Asia, based on a freight rate of about $20 per tonne.

These offers narrowed further to about $550 per tonne cfr Southeast Asia after ferrous futures in China plunged last Friday.

Market sources said there were even offers as low as $540 per tonne cfr Southeast Asia from traders who were aggressively short-selling, although these could not be confirmed and were not considered for Metal Bulletin’s price assessment.

Apart from these, about 60,000 tonnes of May-shipment Iranian billet were also heard offered at $535 per tonne fob via a tender, while India-origin materials were offered at $540 per tonne fob.

Demand in Indonesia was weak because buyers had previously secured large quantities of May-arrival billet. The upcoming Islamic holy month of Ramadan, which begins in mid-May, and the subsequent Hari Raya holiday a month after have also dampened demand for cargoes scheduled for delivery over the May-June period, since buyers do no need any then.

“There are not many buyers in Indonesia now even with traders offering billet aggressively at $550 per tonne cfr Southeast Asia. Buyers are expecting further price drops,” a trader based in Southeast Asia said last Friday.

Demand from Indonesia is expected to resume only after the holidays.

In the Philippines, many buyers began to exit the market last Friday since they took the whole of this week off to mark the Christian Holy Week. Market participants expect buyers to be back in the market only next week.

Slab
In the slab segment, trading activity was limited with few spot negotiations heard.

Market participants said they did not hear of any confirmed transactions over the past week, and agreed that prices had remained unchanged.

Slab shipments from the Commonwealth of Independent States continued to be offered at $590 per tonne cfr to Southeast Asia, largely the same as a week earlier.

Buyers said the weakened ferrous futures in China had caused a bearish mood to settle in the market, leaving them with no interest to purchase spot cargoes due to the high offer prices.

In Indonesia, re-roller sources said that the downstream plate and hot-rolled coil segments remained depressed, and that there was no major pick-up in demand for slab in Southeast Asia.

Metal Bulletin’s assessment of import prices for slab in Southeast Asia and East Asia was $565-575 per tonne cfr for the week to Monday, unchanged week on week.

Sign up here for our free web seminar to learn how Metal Bulletin’s fob China hot-rolled coil and rebar indices can help protect your production and trading margins. Asia steel editor Paul Lim will present on “Increasing trading margins and reducing spot price risks in volatile global markets” on April 10 even as the Asian steel markets has an uncertain outlook and remains heavily exposed to price volatility.

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