Daily Steel News - 29 Apr 10

Scrap importers in East Asia watching, out of market
The scrap import markets in East Asia are quiet as importers continue to stay on the sidelines and delay their buying. Prices of containerised scrap have fallen by around $10/tonne from last week. Some 1,000 t of HMS 1&2 80:20 from Latin America was booked this week at $405/t cfr Singapore, down from offers at
$415/ a week ago. “Prices keep falling,” a trader in Vietnam tells Steel Business Briefing. He says that Vietnamese importers are not booking containerised 80:20 being offered at $430/t cfr, compared to $440-450/t a week ago. “Vietnamese buyers want to book at $400/t cfr,” he adds. Containerised 80:20 was heard by some traders to have been recently booked at $410/t cfr Taiwan. This may have been from small suppliers because large US scrap suppliers are still offering at $420/t cfr. Taiwanese importers have also lowered their bidding price to around $400/t cfr. Containerised scrap was offered at $420-425/t cfr but Korean bids were at $415/t cfr. There are less bulk scrap offers than containerised offers in the market. An offer for US bulk 80:20/shredded scrap was heard last week at $460/t cfr Singapore and for European scrap $460-465/t cfr. The Chinese mills are absent from the imported scrap market. “They cannot buy because local scrap prices are lower,” a trader in Shanghai says. US-origin bulk shredded is offered now at $440/t cfr, he adds. Chinese domestic scrap prices are generally unchanged from last week but described by local traders as soft. HMS 1 is prevailing at RMB 3,100-3,200/t ($454-469), including 17% VAT.

Rebar prices fall further in China
China’s rebar prices are weakening further this week, as more market players become bearish on market prices and make efforts to speed up sales. Steel Business Briefing learns from market sources that Shanghai prices for 18-25mm HRB335, sourced from tier-two mills, have dipped to a prevailing RMB 4,200/t ($615/t), with 17% VAT, compared with last Wednesday’s RMB 4,230-4,250/t ($620-623/t). The approaching Shanghai World Expo is said to have affected local demand, with construction idling in downtown and end-users taking a wait-and-see attitude, but a trader says they should still be able to deliver steel to markets close to Shanghai. In northern China’s Beijing, prices for the same material sourced from Hebei Iron & Steel (Hegang) have declined from last Wednesday’s RMB 4,700/t ($689/t) to about RMB 4,600/t ($674/t). A Beijing trader complained that mills have passed higher raw materials costs onto them by continually raising their ex-works prices, but market prices have dropped far below mills’ ex-works prices; and he reported that Hegang is rumoured to be planning to further hike prices in May. Major mills are yet to re-adjust their export offers, with prevailing prices basically unchanged at about $650-670/t fob for vanadium-added rebar, according to traders. Market offers for wire rod are around $640- 650/t fob, compared with mid-April’s $650/t fob. “Domestic prices are falling. We dare not purchase from mills right now; it’s quite risky,” a Shanghai exporter says.

LME billet price continues down amid record level of trading
The London Metal Exchange’s Mediterranean billet futures contract price has continued to soften this week from last week, and saw record levels of trading activity on Tuesday. The three-month price was at $499-505/tonne (€378-382/t) and cash $471-475/t at the end of Tuesday, softening from $550-560/t and $530-530.50/t respectively at this time last week, Steel Business Briefing learns from LME data. “The month of May is usually a quiet one as Middle Eastern, Ukrainian and Russian buyers have bought the material they need in the physical market,” a trader says. Merchants have possibly taken the opportunity to sell off material as they expect a quieter May, he adds. “So it would not be a good time to hold onto long positions.” The volatility in the strength of the euro and a strengthening dollar are also affecting the price. “We wouldn’t expect it be above $550/t in the short term,” the trader says. The LME said that a new record in trading was achieved on Tuesday with 1,514 lots (98,410t) of the Med contract turned over. This was 17.5% higher than the previous record of 1,288 lots on 19 March.

China domestic iron ore prices become volatile
Rising production costs are forcing Chinese steel mills to decrease purchases of domestic iron ore. This,
combined with a drop in prices of imported Indian iron ore, is causing price swings in the market, Steel Business Briefing learns. In the Hanxin region of northern China’s Hebei province, the price for 66% Fe iron ore concentrate climbed by RMB 94/dry metric tonne ($14/dmt) to reach RMB 1,533/dmt ($225/dmt), including VAT, up from RMB 1,439/dmt ($211/dmt) on 14 April. But in Hebei’s Tangshan city 66% Fe concentrate sold at around RMB 1,158-1,170/wet metric tonne ($170-171/wmt) including VAT, some RMB 71-82/wmt lower than on 14 April. A Tianjin trader notes that weakening prices of imported Indian iron ore have put downward pressure on the Chinese market, while lower demand from mills has also pushed prices down. Steelmakers are using both higher and lower priced iron ore together, in order to control costs, he notes. However, many mills have almost exhausted their stocks of lower-priced ore now and can hardly afford the current high prices. Thus, they are delaying purchases until prices fall. A major iron ore producer in Hanxin notes that being fortunately surrounded by several mills, he has maintained his prices at RMB 1,533/dmt since last week and has sold out of stock. He predicts that purchasing will pick up if prices continue to fall, as mills will return to the market once their ore stocks a