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Indian billet export prices plunge $45/t as Chinese steel futures fall sharply

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BigMint Bureau

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19 May 2021, 20:29 IST

Indian billet export prices plunge $45/t as Chinese steel futures fall sharply

Indian billet export prices witnessed a sharp fall in a recently-concluded tender by a steel mill for 30,000 tonne (t) of blooms (3SP/4SP). According to sources, the mill achieved a price level of $655-660/t, FoB India for end-July '21 shipments.

At the end of last week, an Indian state-owned mill sold around 16,200 t of billets of 125*125mm size through a tender at $700/t, FoB India. The shipment is to be delivered to a South East Asian country by June '21.

SteelMint's bi-weekly assessment for blast furnace-route billet (150*150mm) exports was recorded at $658/t FoB on 18 May'21, down by $43/t against the previous assessment on 15 May'21.

SteelMint analysed following reasons for price drop-

Fall in SHFE rebar futures: The futures are volatile since the end of last week. According to data maintained with SteelMint, the SHFE rebar futures contract for Oct'21 plunged by RMB 862/t ($132/) week-on-week (w-o-w) to close at RMB 5,309/t ($825/t) on 19 May'21. This has likely resulted in the drop in global billet prices as well.
Drop in Chinese domestic billet prices: Owing to the drop in futures, domestic billet prices in China fell by RMB 180/t ($28/t) w-o-w to settle at RMB 5,470/t ($851/t) ex-Tangshan, including 13% VAT, on 19 May '21.

On the other hand, the Chinese government is undertaking all measures to control prices. The government has assured it will restrain iron ore prices from rising, as this will not affect the margins of Chinese mills or reduce consumption. Owing to this, Chinese bids have dropped to $680-690/t CFR from $715-725/t CFR earlier this week.
Higher freights: Freight to China is uncertain. The availability of billet vessels loaded from India is tight owing to Covid concerns. The freight cost is ranging between $60-80/t.

Outlook: Trade sources are very skeptical on the future trends considering the volatility in steel futures and spot prices which are driving bids for imported billets.