Billet producers in the ASEAN region increased their official export offer prices in the middle of this week, following news that export cargoes from China will be inspected more severely to limit non-VAT exports from the country. And even though this news affects HRC exporters more, ASEAN-based mills have taken this as one reason to increase prices. Moreover, some June shipment allocation, from Indonesia in particular, is sold out.
Ex-Indonesia billet offers have been reported by several sources at $510-520/mt FOB on Thursday, April 25, up from $500/mt FOB seen in offers last week. But unlike in previous rounds of bookings, when the mill was increasing offers after achieving higher deal prices, this week the rises have been based more on expectations and developments in China. The latest deal for ex-Indonesia 3SP billet was signed at $500/mt FOB late last week (only slightly up from $490-495/mt FOB deals for the same grade earlier), and since then no any new contracts have been disclosed. “I would say that Indonesian billet should be around $505/mt FOB now, and only for mid-June shipment,” a trader said on Wednesday this week. However, “today Dexin increased the billet FOB price to $520/mt. I am not too sure of the reason as it is crazy,” another international trader commented to SteelOrbis on Thursday. Some large traders believe that $520/mt FOB is just voiced officially, while in reality from case to case the producer will agree on $510/mt FOB. “It has to be due to China’s non-VAT story. I don’t see other reasons,” one more source said.
Offers from Malaysia increased from $500-505/mt FOB last week to $510/mt FOB on Wednesday, and market sources are not excluding further increases if some previous hikes are accepted by buyers.
Starting from early this week, the Chinese customs authorities have started investigations into the non-VAT business and, even though this is impacting more HRC exports, the market on the whole is impacted by the news. “All billet and slabs have already been checked at loading ports by the authorities before they are shipped, but the recent news could be a reason for hikes [by ASEAN mills], the same as Chinese futures,” a Singapore-based trader said. Ex-China indicative 3SP reference prices are stable at $500-510/mt FOB.