Chinese longs producers, who account for 10% of global long steel exports, have attempted to raise offers again (+$5-10/t in a week) amid improved demand from foreign customers compared to the second half of August and increased iron ore prices. Besides, supply is tight as some producers are absent from the export market.
In particular, a major supplier Beitai Steel closed its order book for September wire rod production last week and has temporarily left the market. The latest deals with Asian buyers (from South Korea in particular) have been closed at $725/t FOB. Steel traders report a total of 70,000 t of September wire rod from Beitai Steel has been sold in the export market, 20,000 t of which – to Korean buyers. Besides, contracts at $720-725/t FOB have been signed with customers from South America and the Middle East.
Market players report there have been no deals after the increase, since Asian buyers are trying to get discounts, having somewhat refilled their inventories. Thus, bidding prices for wire rod are coming from Vietnam and South Korea at $710/t FOB ($735/t C&F) and $725/t FOB ($735/t C&F). Yet, prices from Chinese sellers will probably be accepted within one or two weeks, taking into account the expected upturn in end-user activity in SE Asia after the rainy season. Besides, customers from the Philippines have already lifted bids to $725/t FOB ($750/t C&F) against $710/t FOB ($735/t C&F) a week earlier.
Market participants are sure prices will not move up again until September, considering that stockists’ and mills’ domestic prices are static and the fact that new export prices have not been accepted yet. Moreover, Chinese sellers will probably cut $5/t when making deals. This week’s slight yuan devaluation has not played into exporters’ hands either.
At the same time, after domestic quotations of longs increased in mid-August, both mills and trading companies mainly fixed prices. Market players still believe domestic prices will not change dramatically until the end of the month, taking into account both the continuous upturn in longs offers in July-early August and the drop in end-user demand. As reported earlier, the programme for construction of 10 million resident houses has slowed down somewhat. Still, the government insists the 2011 target will be fully met.
( Source: www.metalexpert-group.com )