Daily Steel News - 17 Mar 09

Weakness in imported rebar continues in East Asia
Spot prices for rebar imported into East Asia are moving close to $400/tonne cfr. Regional traders report that 10,000 tonnes or more of Taiwan-origin rebar were booked at $410/tonne cfr Hong Kong. Offers to Singapore were heard at around $420-430/t cfr last week, with bookings made at $425-430/t cfr for Korean and Turkish material. Buyers in Singapore are aiming to book at around $400/t cfr. "Prices are falling because of weak scrap and billet prices," a Taipei trader says. Japanese H2 grade scrap is being booked at $200-210/t cfr levels in north east Asia. Some traders tell Steel Business Briefing that rebar prices will dip under $400/t cfr by the end of this month because there is no support to prevent prices from falling further. "Demand is just not there. Buyers just want to wait and see," a Singapore trader says, adding that high-priced inventories still remain in warehouses. Others say that the continued practice of traders to lower prices to induce bids is depressing market sentiment. "It's hard to see where genuine buying (prices) at the moment," a trader says. "Prices are coming down. I am telling my buyers to book on a needs-only basis," another says. The last concluded price for rebar was at $440/t cfr Singapore for Korean material and Turkish-origin rebar at around $420/tonne cfr Hong Kong

Chinese H-beam producers cut output by 30% till June
Maanshan Iron & Steel (Magang), Laiwu Iron & Steel (Laigang) and Jinxi Iron & Steel (Jinxi) have agreed to cut production of heavy H-beam sections by at least 30% from April until June, Steel Business Briefing confirms with mill and market sources. A source with Jinxi says the mills' collective production cut will amount to more than 100,000 tonnes/month. The three H-beam producers also reached a consensus at a meeting last week to stabilise ex-works prices for heavy beams by establishing a "bottom price" of RMB 3,500/tonne with VAT ($512/t). However, this may be difficult to achieve, SBB is told. Magang's March ex-works price for 350x350mm is
RMB3,686/t with VAT. Magang compensates its agents RMB 420/t for early March deliveries, eaning the actual price will have breached the mills' bottom line of RMB 3,500/t. SBB is told by a mill source that the mills agreed to abolish the compensation system and if traders want to be profitable they must sell above the ex-works price. As a result, Shanghai traders have raised their offers considerably for heavy H-beams, such as 350x350mm, by RMB 300-350/t to about RMB 3,450-3,500/t. Prices for light H-beams, such as 200x200mm, have also been lifted by RMB 130-150/t to RMB 3,260-3,300/t. All prices include VAT. "Both traders and mills intend to increase their prices, but it's the traders who are taking on the most risk as people weren't buying at cheaper prices," a Shanghai trader says. He doubts whether the measures taken by mills will have any positive effect on the market.

H-beam import prices spiral down in SE Asia
Asian steel traders have been stunned by an offer last week to supply Italian-origin imperial sized H-beams at the base price $550/tonne cfr Singapore for April/May shipment. The last concluded bookings about a week ago for H-beams produced by regular Asian suppliers including Taiwanese and Korean mills were at $630-650/t cfr. Offer prices are now around $610-630/t cfr, mill and trading sources tell Steel Business Briefing. Limited transactions were taking place at $650-680/t cfr Southeast Asia three weeks ago. "This low-priced offer is causing fear in the market. Certain mill suppliers are on red alert," a trader in Singapore says. A Taiwanese trader says that, while he agrees that the offer was alarming, it was a spot offer and buyers are wary about buying H-beams from non-regular suppliers. "Delivery and performance is important, especially since buyers are booking for their projects and not buying to accumulate stocks. It is unclear when the Italian material will arrive because orders will have to be combined to make a shipment out from Europe," he explains. SBB understands that banks are also not giving credit to buyers who want to buy forward. "The Italian offer for H-beam is coming from a long way. It doesn't worry us," a representative from Northeast Asian mill tells SBB. Regional mills have been making production cuts in response to weaker demand, he adds. Metric-sized H-beams from China are reportedly being offered at $490/t cfr Vietnam, down from the quoted $600/t cfr levels heard in early February.