Following a long hiatus, Chinese billet offers have re-appeared in the Saudi Arabian market at very competitive prices, Kallanish observes.

Last week, Chinese-origin blast furnace-route billet quotes were at $545/tonne cfr (liner out) Saudi west coast for late-December/early-January shipment. Due to long lead times, buyers are however hesitant to book Chinese material; moreover, the quotes have created a perception that billet prices will soften amid sliding Southeast Asian billet prices.

"When China is in the longs export markets, prices slide; this is what I learned in my long years of business life in the steel trade. We haven't heard of Chinese billet offers for a long time,” explains a sell-side source. "We are coming to the end of the year, and nobody is in a rush for billets. Buyers are waiting to see Russian Metalloinvest's December-shipment prices as the blast furnace Russian producer [Metalloinvest] has a good sales record and a reputation in the Saudi market."

Last week, an ex-Malaysia 20,000-25,000-tonne blast furnace-route billet offer to Saudi Arabia at $555/t cfr Saudi west coast did not translate into a deal, a prominent source confirms to Kallanish.

In Dammam and Riyadh, local induction furnace billet prices are prevailing at SAR 2,260-2,325/t ($603-620) ex-mill; the higher margin is for manganese-enriched material. Saudi rebar re-rollers – billet buyers – had adopted a wait-and-see policy until Saudi market maker Hadeed announced its November-delivery rebar price, which it did on Wednesday (see separate story). Merchant billet producers are receiving cancellations for previously-ordered billet and rebar producers are receiving cancellations from traders.

"This week, rebar market activity was silenced in Saudi Arabia, factoring to subdued rebar demand. The duty exemption granted to Emirates Steel Arkan concerned traders and stockists while they observed weakening end-user rebar demand. They suspect that ESA will sell rebar at discounted prices to the Saudi market,” comments a merchant billet producer.

An ESA senior official however told Kallanish this week: "Tier-two mills in Saudi Arabia set their rebar quotes upon market designer Hadeed [tier-one mill], and we will be taking our position upon tier-one mill quotes, not tier-two or tier-three” (see 26 October newsletter).