Chinese importers stop purchasing billets

A wide price gap between buyers and sellers has led to a stalemate in the Chinese billet import market for almost three weeks since the beginning of September, while buyers in the Philippines instead accelerated purchases amid recovery in steel demand.

Spot prices in China fell sharply to an 11-week low on September 21. As a result, several large Chinese billet importers closed the import window as overseas supply declined at a slower pace, broadening price ideas.

Tangshan Q235 billet was priced at RMB 3,400 /t ($ 501 /t) on September 22, down RMB 170 /t ($ 26 /t) from its September 3 peak.

According to a local trader, domestic traders declined offers to cut positions amid sluggish spot trading activity, but buyers continued to show limited interest.

As a result, buy indicators fell to $ 430-435 /t CFR China for 3SP 150mm material amid bearish sentiment. Limited bids were received at more than $ 450 per tonne CFR China for December shipment, widening the buy-to-sell price gap to $ 15-20 per tonne, higher than the $ 5 per tonne gap seen in early September.

Only one CFR China trade was struck in September in the week ending September 4, up from 19 in August and July 21, spot market data compiled by S&P Global Platts showed.

“The import of billets has come to an end and I am starting to look for export opportunities for long products,” a trader from eastern China said on September 22.

Several large importers agreed that the arbitration window for the import of billets could be closed, at least for a short time, stopping their procurement of billets for several weeks.

The sources also added that it is difficult to say when China will resume importing billets again, while domestic prices remain under pressure.

On the other hand, valve manufacturers in the Philippines showed higher interest in procurement of semi-finished products from Russia, the CIS, Vietnam, India and Indonesia amid stable capacity utilization.

The outlook for the fourth quarter showed that demand for steel will remain stable, representatives of the two resale companies said.

Meanwhile, any significant increase in demand will remain until 2021, while the pandemic continues, as restrictions on public transport, which could affect the movement of labor to and from the mills, have made it difficult to further improve steel production and construction.

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