Last week, as expected, the global market focused on understanding the effects of the slump in seaborne iron ore prices registered on 26 November. All steel prices internationally have suffered as a consequence, but the latest reduction in CIS billet prices confirms that the year is coming to an end amid a very serious downturn. Chinese mills are becoming competitive in export markets again and this is creating convern, and even some panic, in other regions.

The already bearish trend for CIS billet, for example, has intensified after Chinese traders entered the market with offers of January loading billet at $430-440/tonne fob China. This is a move that Mediterranean market participants have been dreading. Although there is no direct interest in booking Chinese billet in the Mediterranean or Middle East and North Africa markets, participants are aware that should offers persist, Southeast Asian business will suffer.

The Asean market has been a lifeline of late for CIS and Turkish billet exporters thanks to the fact Chinese mills have mostly concentrated their attention to the domestic market this year. Should this trend change in the coming months, the domino effect could accelerate for all steel prices. In the Philippines last week for example a source said that actual bookings of Chinese billets were not being confirmed, despite the reduction in offers. Nevertheless he confirmed that those in need of buying in the coming weeks will approach Chinese traders and could well place some orders.