Daily Steel Nws - 21 Jan 11

SBB Prices & Indexes
World price +/-
World HRC $/t 763 +75
World Rebar $/t 728 +60
Traders expect more upside for SE Asian billet import market
Southeast Asia’s market for imported billet is fairly stable, trading sources tell Steel Business Briefing. While prices are inching up, buying activity is still not strong. Recent bookings of Russian-origin billet at $660-665/tonne cfr Southeast Asia and Asean-origin billet has been concluded at $685/t cfr. These include Malaysian billet sold to Indonesia and Thai material to the Philippines. The CIS mills are offering material for March shipment which poses more risk relating to uncertainties over future market direction compared to prompt shipments. Billets from Asean mills have shorter delivery times and enjoy an import duty advantage within the region. Malaysian-origin and Thai-origin billet is currently offered at around $680/t fob. A certain Malaysian mill reports that it has sold at this price to a trader and has since raised its price to $720/t fob. “They offered us at $680/t fob as well but we are not interested,” a trader says. He and others say that the new price is overly high for today’s market. A Thai mill is offering billet at $700/t cfr Philippines. “Buyers are still hesitant but some are concluding ahead of the Chinese New Year holidays,” a regional trader tells SBB. He believes that billet prices – stable for now – will undergo another round of price increases because scrap is firm and "buyers have no choice." Another says: “Billet prices are rising slowly; buyers are not biting and would rather wait till after the holidays to book.” While the CIS mills are aiming to export at $680-690/t cfr SE Asia, scrap prices will ultimately determine suppliers' billet prices.

58% iron ore price at new peak; 62% nears 12-month high: TSI
The latest daily iron ore reference prices released by The Steel Index (TSI) yesterday, Thursday, show that the prices for both 62% and 58% Fe content iron ore have moved strongly upwards during the past week, continuing the trend since early November. Average weekly freight rates from Australia slipped down, while rates from Brazil moved lower initially before returning to the same level. Weekly rates from east coast of India were essentially stable, but freights from west coast fell. The reference price for 58% Fe content iron ore fines is $5.90/dmt higher at $157.50/dmt; above the previous high of 23 April last year.
The reference price for 62% Fe content iron ore fines yesterday showed a $8.90/dmt, or 5%, increase and ended at $185.40/dmt; just below the 2010 peak of 21st April. Daily freight rates from Brazil to China firmed at the start of the week but eased and finished 2% higher. Rates from Australia dropped but then gained to nearly 1% below last week. Daily freight rates for shipments from east coast of India rose 2.5%; rates from west coast dropped nearly 10%. TSI is majority-owned by Steel Business Briefing and specialises in compiling steel, scrap and iron ore reference prices based on actual transaction data. Further details of the methodology and specifications for the two grades of iron ore can be found on the website www.thesteelindex.com. Companies wishing to subscribe to the full set of reference prices or apply to submit iron ore, scrap or steel price data can do so on the website.

More signs of longs markets peaking, as scrap prices stall
Spot 62% Fe iron ore prices last week rose 3.3% to $178.3/dmt, according to The Steel Index, whilst Turkish scrap prices hardly moved. Many steel prices continued to increase, however. Iron ore availability in China was restricted due to both limited supplies and steady demand from local traders and small domestic mills preparing for the spring construction season. Last week, Chinese traders booked 63.5/63% Fe fines from India at $179-181/dmt cfr China and prices have since risen further. Offers for 63.5/63% ore reached $190/dmt. In contrast Turkish scrap demand was slow as local traders and mills were sceptical about passing the higher scrap prices on to the regional markets for rebar, and to a lesser extent billet. In South East Asia though, scrap and billet prices continued to climb, but rebar prices too were responding only sluggishly. In contrast, the mood in the Chinese steel market appears upbeat as the New Year approaches. Withdraw material costs rising, mills hiked their list prices for February, and exchange-traded steel futures soared on anticipation of the higher prices. But again questions remain over underlying demand, with much speculative buying. By and large, strip and plate prices are continuing to rise reflecting the higher Q1 contract prices for iron ore and coking coal, and the expectation of higher Q2 prices. Since the final months of last year, these costs are estimated by SBB to have risen by about $100/t, with some analysts talking about another $100/t for Q2. US sheet prices have risen by more than this, whilst those in Europe have increased by about this amount. Stockists as well as end-users have been buying, highlighting the conditional nature of these increases, particularly in North America.