ASEAN import markets for billet and hot rolled coil continued to see offer prices fall rapidly in the past week, Kallanish notes. Prices for Chinese billet and HRC appear to be racing each other as they spiralled down to the $500/tonne cfr Southeast Asia level on Friday. These offers are below the back-to-back quotes and production costs of Chinese mills.

Regional trading sources blame the aggressive pricing on traders short-selling, in anticipation of prices coming down when they need to ship the steel out. “They are shorting the market with expectations of further depreciation of the CNY,” a Hong Kong trader says. “Demand for steel in the winter will weaken.” While it is hard to predict when steel prices will find support, he thinks prices will stabilise slightly, after more export orders are concluded.

Certain exporters who are offering billet at below the current market price are offering open origins, of either Chinese or ASEAN material, a Chinese trader says. "When they need to ship, they hopefully can find the cargo from ASEAN mills. Or else, they ship Chinese billet without paying the VAT," he adds.

Chinese HRC has been falling noticeably quicker than billet and wire rod in the region. Traders pressing down the market by frequently offering at ever-lower prices and depressed demand in Vietnam are some of the main factors for this.

The Vietnamese steel market has been suffering from tightened credit and poor demand. Property fraud scandals have caused Vietnamese authorities to scrutinise and impose strict credit restrictions on the real estate sector and these, in turn, have quelled construction activity in the country.

Meanwhile, billet prices in the region have started to tumble quicker. However, most Chinese billet export offers are typically for 150mm 3sp grade, so the slide in the market could be less quick. “There are maybe maximum three buyers that can buy this size in 3sp grade,” a Manila trader says. “But there’s a psychological impact on prices even on other origins and products.” Another Manila trader observes: “The more they [traders] lower the price, the more the fear that further price decreases are imminent.”