Imported Billet Offers find Resistance

Imported Billet offers from China find resistance as Chinese mills cut down production before upcoming week long holidays.

MS Billet prices find support as global prices stabilize and domestic manufacturers are reluctant to cut prices after a steep correction by INR 2,000/MT M-o-M.

Global Market: Resistance is seen on consistently falling Billet offers from China to India and South East Asian market. With Chinese New Year holidays starting from 18 Feb’15, Steel mills in China have already sold some quantity to South East Asian countries.

“Prices have stalled at USD 375-380/MT, CFR South East Asia. Chinese mills are not cutting down prices further as they have orders in hand. Chinese mills wanted to sell their stock before New Year holidays. Further correction is not expected , at least till holidays get over in China”, said a trader based in Singapore.

Another importer, who was offering Chinese Billet at USD 375/MT, CIF India mentioned, “The Indian buyers are reluctant to buy Chinese cargo. As they worry that government can impose some restriction on import of Billet as they have done for Rebars. Nobody in India is willing to book bulk cargoes for which delivery will be made after 2 months.”

Indian Billet Export Tender receives Lower Bids

Indian Billet export tender has received bids lower by USD 15/MT to USD 390/MT, FoB East Coast India.

Participants mentioned that Sri Lanka government has recently removed the preferential duty on import of Billet from India (which was nil for India and 7% for suppliers from the other country) that will lower export prices from India further.

Domestic Billet Production Cost remains High over Selling Prices; Expert says Industry will Consolidate

Indian Billet prices have corrected by upto INR 2,000/MT M-o-M. With imported Scrap offers falling consistently, markets will not be surprised if prices fall further. However, manufacturers are reluctant to cut prices owing to declining raw material prices as overall cost still remain high as ready stock prices are at high levels.

Sponge based market in India witnessing high production cost and low selling prices from last couple of months. Industry sources believe if this situation will continue for further 2-3 months, many plants will be shutdown due to irregularity in incoming and outgoing payment cycle.

Central India based 7 MT induction furnace operator says, “Currently, our cost of production is INR 26,500-26,700/MT if we consider Sponge iron (80 FeM ) at INR 18,200/MT, FoR and mix of 80:20 Sponge & Scrap with 775 units of electricity. Therefore, we have a loss of INR 700-800/MT at present.”

Similarly, manufacturer based in Kolkata says, “We need minimum conversion spread of INR 9,500/MT over Sponge iron (78 FeM). Today, minimum loss to every induction furnace is INR 800-1,000/MT”

Scrap based market in North & West India requires minimum conversion spread of INR 9,000/MT from Scrap. But presently, the units are working at INR 8,000-8,500/MT.

MS Billet Prices as on 13 Feb’15

Source: SteelMint Research