China continues steel billet buying at higher prices amid output cut news

Major Chinese market participants received word on Monday that steel production cuts in the nation would be extended beyond December into early 2022. This led to a plunge in iron ore prices but bolstered demand for billet, which can be used instead of melting new steel.

Several deals for Indonesian 3sp 150mm blast furnace (BF) billet were closed in the range of $695-705 per tonne cfr China in recent days, Chinese buyer sources said, while deals for Vietnam-origin 3sp billet were done at $700-705 per tonne cfr China.

This was up from deals at $685 per tonne cfr China for Indonesian BF billet one week earlier.

Sources said it was likely that prices would continue to increase in the short term.

“A trading company bought a tender for Indian BF material last week which would work out at $690-695 per tonne cfr China in the current market, but it seems that the company is not satisfied with this price and has not yet decided to sell the cargo,” a Chinese buyer source said.

“Most sellers are booked for October shipment now, and Vietnamese BF sellers, who can do all major sizes and grades, know that they can get [more than] $690-695 per tonne cfr China today,” a South Asian trading source said on Tuesday.

Another reason for the higher offer prices was the continuing rise in freight costs over recent weeks. Sources said on Tuesday that freight costs from the east coast of India to China would be $85 per tonne for 30,000 tonnes, up from $80 per tonne previously.

Freight costs for 20,000 tonnes of billet from Vietnam to Manila have risen to $38-40 per tonne, up from $30 per tonne one month ago, Fastmarkets heard.

Fastmarkets’ daily price assessment for steel billet import, cfr Manila, for 5sp material was $675-680 per tonne on Tuesday, up on the day by $5 per tonne from $670-675 per tonne, where the price had held steady since August 25.

Vietnam-origin induction furnace (IF) billet of 5sp quality was offered at $690 per tonne cfr Manila on Monday for early-November shipment.

An offer of 3sp 150mm BF billet from Vietnam worked out at $695 per tonne cfr China, but the Chinese buyer source expected offers of BF billet to be higher into Southeast Asia on Tuesday, following the latest deals to China.

Although the Manila area is transitioning away from a strict Covid-19 lockdown arrangement this week to what has been described as a more ‘granular’ regional approach, sources noted that infection numbers were continuing to set record levels in the country.

Billet bids from mills in Manila were heard at $670 per tonne cfr for 5sp BF billet late last week, but sources said on Monday that the price rise in China meant that they would now be willing to pay $675-680 per tonne cfr for such material after negotiations.

A major Indonesian mill was heard to have bid $670 per tonne cfr for India-origin 150mm 5sp BF billet late last week. This would be up from bids of $650 per tonne cfr at the start of last week, but still less than the $700 per tonne cfr being requested by the seller.