Imported billet prices rise on firm scrap in SE Asia
Recent bookings of imported billet in southeast Asia have risen to $430-435/tonne cfr, up by $5-10/t from bookings made in the second week of June. Importers in Vietnam paid around $435/t cfr for Russian-origin material, whereas buyers in the Philippines and Thailand recently booked at around $430/t cfr. Bookings were for August/September shipments, trading sources tell Steel Business Briefing. "Demand is there. But buyers are cautious because prices are moving up," a regional trader in Singapore notes. New offer prices have since risen to around $440-460/t cfr for Russian and Ukrainian material, traders say. Offers from Malaysia are heard at $450/t fob, or around $470/t cfr Thailand. "It is the rainy season. demand is weaker. Those who needed material have already bought," an importer in Vietnam says. He is not buying now but says that offer prices rose last weekend. Bullish traders believe that prices are on the uptrend. "They are ready to pay higher billet prices because scrap prices are firming," a trader in Vietnam tells SBB. Traders report hearing unconfirmed bookings of billet at $450/t cfr. This was for southeast Asian origin billet booked to Vietnam (where Asean-origin imports are levied preferential 5% import duty instead of 8% for imports from elsewhere) and a booking to Thailand. "We heard that some buyers raised their bidding price to $450/t cfr because they were not able to secure material at $440-445/t cfr," says a Thai trader. Domestic scrap shortage, due to local scrap yards withholding cargoes in a rising market, is behind recent buying interest for billet, he tells SBB.
No steel demand recovery before Q4: Fitch
Ratings agency Fitch does not expect steel demand to recover before the fourth quarter of 2009, it says in a report sent to Steel Business Briefing. Stocks of some products are depleted in certain regions and new orders are improving, but a "rebound in real demand will require a strengthening in consumer and investment spending, which may just be bottoming out," according to the report. Construction demand is likely to pick up in the near to medium term because of government infrastructure spending, but 2009 automotive requirements will be down 15% in the US and 12-15% in western Europe on already soft 2008 levels. The agency does not expect a substantial recovery in automotive demand until well into 2010. Steel mills' earnings and cash-flows will suffer until real demand does increase, and problems with credit insurance will further constrain trading, it adds. Ramped-up Chinese production may further pressure margins in regions afflicted by weak demand. "The reinstatement of export tax rebates on some steel products may result in excess production pressuring weak markets elsewhere," Fitch says. Mill capacity utilisation rates will improve to 60-70% when destocking has been completed, Fitch believes, but will remain below 75% until demand recovers. European mills were producing at 49% of capacity last month, while output was at 43% in the US. Global steel production declined by 22% in January-May 2009, compared to the same period in 2008.
Recent bookings of imported billet in southeast Asia have risen to $430-435/tonne cfr, up by $5-10/t from bookings made in the second week of June. Importers in Vietnam paid around $435/t cfr for Russian-origin material, whereas buyers in the Philippines and Thailand recently booked at around $430/t cfr. Bookings were for August/September shipments, trading sources tell Steel Business Briefing. "Demand is there. But buyers are cautious because prices are moving up," a regional trader in Singapore notes. New offer prices have since risen to around $440-460/t cfr for Russian and Ukrainian material, traders say. Offers from Malaysia are heard at $450/t fob, or around $470/t cfr Thailand. "It is the rainy season. demand is weaker. Those who needed material have already bought," an importer in Vietnam says. He is not buying now but says that offer prices rose last weekend. Bullish traders believe that prices are on the uptrend. "They are ready to pay higher billet prices because scrap prices are firming," a trader in Vietnam tells SBB. Traders report hearing unconfirmed bookings of billet at $450/t cfr. This was for southeast Asian origin billet booked to Vietnam (where Asean-origin imports are levied preferential 5% import duty instead of 8% for imports from elsewhere) and a booking to Thailand. "We heard that some buyers raised their bidding price to $450/t cfr because they were not able to secure material at $440-445/t cfr," says a Thai trader. Domestic scrap shortage, due to local scrap yards withholding cargoes in a rising market, is behind recent buying interest for billet, he tells SBB.
No steel demand recovery before Q4: Fitch
Ratings agency Fitch does not expect steel demand to recover before the fourth quarter of 2009, it says in a report sent to Steel Business Briefing. Stocks of some products are depleted in certain regions and new orders are improving, but a "rebound in real demand will require a strengthening in consumer and investment spending, which may just be bottoming out," according to the report. Construction demand is likely to pick up in the near to medium term because of government infrastructure spending, but 2009 automotive requirements will be down 15% in the US and 12-15% in western Europe on already soft 2008 levels. The agency does not expect a substantial recovery in automotive demand until well into 2010. Steel mills' earnings and cash-flows will suffer until real demand does increase, and problems with credit insurance will further constrain trading, it adds. Ramped-up Chinese production may further pressure margins in regions afflicted by weak demand. "The reinstatement of export tax rebates on some steel products may result in excess production pressuring weak markets elsewhere," Fitch says. Mill capacity utilisation rates will improve to 60-70% when destocking has been completed, Fitch believes, but will remain below 75% until demand recovers. European mills were producing at 49% of capacity last month, while output was at 43% in the US. Global steel production declined by 22% in January-May 2009, compared to the same period in 2008.
Malaysian Ringgit Exchange Rate