China’s renewed demand for pig iron and billet has sparked considerable interest in Asia. Regional market participants are hoping Chinese buying can give a much-needed boost to current depressed steel markets.

Chinese end-users, through a Chinese trader, recently ordered a 20,000-tonne cargo of blast furnace billet from Indonesia at $405-410/tonne cfr China. The April-shipment cargo deal price was lower than expected, as Asian mills are currently aiming to export at $400-410/t fob. However, Kallanish understands the price is low because the deal involves full pre-payment by transfer, and freight will cost above $10/t, making the export price $390/t fob.

Conversely, sources are surprised Chinese buyers will accept a price above $400/t cfr. Most Chinese importers are aiming to book billet at $380-390/t cfr China. “I am a little surprised the Chinese can pay this price,” a Singapore trader says. But another notes that, under the ASEAN-China free trade agreement, Indonesian billet would be tax-exempt.

The price is just about acceptable, a Chinese trader said on Thursday. Buyers will not accept billet prices above $410/t cfr China, he adds. Domestic Chinese billet prices are prevailing at the equivalent of $451/t, including 17% VAT. A regional trader hears there were three lots of a combined 60,000t booked to China from the Indonesian mill at $405/t cfr. Kallanish was unable to verify this before deadline.

Chinese importers are also heard to be eyeing pig iron from overseas. A regional trader hears two bookings of basic pig iron, from India and Brazil, took place last week at around $345/t cfr China. Another reports hearing a Chinese trader won an Indian pig iron tender at $348/t cfr, and he also heard Brazilian pig iron offered at $347/t cfr China. But he is unclear if these cargoes were eventually booked. There could also be traders who are offloading earlier positions booked at higher prices, he adds.

With diminishing numbers of Covid-19 infections in China, the Chinese steel industry is optimistic that steel prices will propel upwards. “As the virus situation has much improved, Chinese domestic demand is returning step-by-step, which makes mills more confident about sales now,” another Chinese trader says.