China domestic billet prices rose to 5 years high level due to short supply.
According to market participants, “Price from Tangshan area, on Wednesday 12 July was 3400 Yuan per tonne (USD 500) which is higher by about 1.2% than the price day before which was 3360 Yuan per tonne (USD 496), Prices in the past 3 months have increased by almost 17% .”
The market participants further say that “The prices have increased after the Chinese billet supplies have been short in the domestic market. The reason being the policy of the government in the country to eleminate small induction furnaces (which produced about 50-60 MnT according to industry participants) by 30th June, Domestic billet prices have increased sharply in last few months and currently being traded at RMB 3,350-3,400/MT (USD 482) ex-Tangshan, including VAT of 17%.”
The supply of the raw material are surplus to the steel makers in China still the conditions are favourable for the price. The raw materials (including the coal and iron ore) price have increased in the recent weeks as it is supported by the growth of steel makers profit. The Margins for the steel makers have also increased in the recent years.
China is the largest producer of steel in the world, producing about 808 MnT in a year. Total crude steel production in the world is about 1630 MnT out which China is accounting almost 50%.
Sources reported that presently there is no fresh deals from the Chinese exporters as the offer prices are high which is not less than USD 464-470/tonne FOB China.
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