Indonesian billet prices have experienced a surge due to a pick-up in trading activity, driven by Chinese traders' renewed interest. The rising steel futures on the Shanghai Futures Exchange (SHFE) since last Thursday could be the catalyst behind the traders' return to the market.
On May 21, a Chinese trader booked 20,000 tonnes of 3sp grade 150mm square Indonesian blast furnace billet for July shipment at $498/t fob. According to trading sources, this order was placed to cover a short position, as the trader had previously closed an order at $515/t cfr Philippines, resulting in a loss on the spot contract. However, the trader likely took a long position on the Chinese futures, potentially aiming to profit from the current rally.
Another Chinese trader secured 7,000 tonnes at the same price of $498/t fob for the Taiwan market on the following day.
On May 20, the Indonesian mill's offer was reported to be $495/t fob. Last week, the same mill sold 5sp grade billet at $497/t fob to a Chinese trader, also to cover a short order. Based on the fob price paid, it is estimated that a Philippine reroller took the 5sp cargo at around $520/t cfr.
In the previous week, the Indonesian mill was heard to have sold 3sp grade billet at $490-493/t fob in the ASEAN/China region. Additionally, within the past few days, another Chinese trader booked 3sp grade billet of the same size at $495/t fob, according to market sources.
The renewed interest from Chinese traders, likely driven by the SHFE steel futures rally, has contributed to the rise in Indonesian billet prices after a period of sluggishness in the market.
