Malaysian domestic prices increase for rebar and rod
Malaysian mills have raised domestic prices of wire rod and rebar on improved market sentiment and rising scrap prices, mill and trading sources tell Steel Business Briefing. Mill list prices for rebars have risen by RM 100/tonne ($28/t) since the last week of April to RM 2,000-2,100/t ($569-598/t) ex-works domestic prices of mesh-grade rod were raised across-the-board early this week by RM 50/t to RM 2,100/t. Mill sources say that wire rod prices were already raised by RM100/t last month. "Demand for long products is picking up. The outlook is better than two months ago," a manager with a local mill tells SBB. He adds that de-stocking has taken place and export orders for wire rod to the Middle East and neighbouring countries including Vietnam have increased during the period. Another mill manager says the recent launch of government construction projects, as part of the stimulus package, has played a part in boosting market confidence. While the mills have raised their list prices, traders tell SBB that actual selling prices are discounted by RM 50-100/t because demand has yet to fully return to normal levels. "Demand in Malaysia remains weak," a local trader notes. Malaysian mills are still offering billet exports at $420-430/t fob, which are not price-competitive within Southeast Asia."Why export billet if the mills can sell their finished product at much higher prices?" he rationalises. The conversion cost of billet into bar is normally around $40-50/t. Malaysian mills were actively exporting billet to countries such as Vietnam earlier this year.
Malaysian mills have raised domestic prices of wire rod and rebar on improved market sentiment and rising scrap prices, mill and trading sources tell Steel Business Briefing. Mill list prices for rebars have risen by RM 100/tonne ($28/t) since the last week of April to RM 2,000-2,100/t ($569-598/t) ex-works domestic prices of mesh-grade rod were raised across-the-board early this week by RM 50/t to RM 2,100/t. Mill sources say that wire rod prices were already raised by RM100/t last month. "Demand for long products is picking up. The outlook is better than two months ago," a manager with a local mill tells SBB. He adds that de-stocking has taken place and export orders for wire rod to the Middle East and neighbouring countries including Vietnam have increased during the period. Another mill manager says the recent launch of government construction projects, as part of the stimulus package, has played a part in boosting market confidence. While the mills have raised their list prices, traders tell SBB that actual selling prices are discounted by RM 50-100/t because demand has yet to fully return to normal levels. "Demand in Malaysia remains weak," a local trader notes. Malaysian mills are still offering billet exports at $420-430/t fob, which are not price-competitive within Southeast Asia."Why export billet if the mills can sell their finished product at much higher prices?" he rationalises. The conversion cost of billet into bar is normally around $40-50/t. Malaysian mills were actively exporting billet to countries such as Vietnam earlier this year.
China speeds up de-stocking of long products
De-stocking of steel in major Chinese cities has gathered speed, according to the country's ministry of industry & information technology (MIIT). By 20 April, market inventories had fallen 880,000 tonnes or 8.1% from end-March to 9.96m t. This follows the 4.2% drop by late-March from end-February. Rebar and wire rod stocks fell the most, the MIIT notes in a report seen by Steel Business Briefing. From late-March till mid-April, rebar and wire rod inventories dropped to 3.59m t and 1.25m t respectively, down by 12% and 21%.By contrast hot rolled coil, cold rolled coil and plate stocks dipped only slightly (by 1.5%, 0.8% and 1.6%) to 2.68m t, 1.18m t and 1.26m t respectively. MIIT also quotes data collected from 67 major mills (that produce 77% of China's steel) to show that crude steel production declined during the period 10-20 April. Over the ten days, the mills produced 10.93m t of crude steel, equivalent to a daily output of 1.09m t, down by 31,000t or 2.8% from the first ten days of April. Thus a preliminary estimate of China's raw steel output in April's first 20 days becomes 1.41m tonnes/day (a 3.1% decrease on March). But the ministry warns this is higher than the 2008 average of 1.37m t.
Some say pricing rebar basis LME, others say it's only talk
Some companies have begun pricing rebar contracts off the London Metal Exchange billet price, one exchange member company tells Steel Business Briefing. Turkish and, to a lesser extent, Middle East Gulf companies are pricing their rebar off the LME Mediterranean billet contract with a slight premium, the member says. However, LME-basis pricing isn't widespread and there is no formula for calculating the premium, he adds. Turkish export rebar is currently priced at $460-70/tonne, according to SBB data. With the latest cash mid-point for the LME Mediterranean billet at $335/t, this equates to a premium of $125-135/t. Other trading sources say companies have been talking about pricing off the LME, but are not yet doing so.
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