Chinese billet exporters continue to raise their offers on rising domestic prices, which is clearly due to expensive imported raw material prices like iron ore and coking coal.
Current offers for Chinese billets are assessed at around USD 345-350/MT FoB China, however there are no firm offers in the market. Last month offers were assessed at around USD 330-335/MT FOB China. Billet export offers have increased in line with domestic prices, which are currently trading at RMB 2390/MT (USD 362 ) against an average price of RMB 2100 (USD 318) in July 2016 (domestic prices are incld VAT of 17%).
Rising imported coking coal and iron ore prices
The sea borne coking coal and iron ore prices have increased significantly in last few months owing to supply issues in China. Falling domestic production of coking coal and iron ore has made Chinese buyers to rush to prompt supply, which resulted in increase in demand and prices.
Coking coal prices have surged to 20 months high to USD 124-125/MT, CFR China in August against USD 100-105/MT, CFR in Jul’16.
Market experts mentioned that only reason for rising steel prices in China is falling production of domestic raw materials, which is due to heavy rainfalls in the key producing areas.Market participants expect prices may correct once domestic production normalizes.
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