[SMM Analysis] Steel Export Price Spreads Diverge: Billet Strong, HRC Weak, Ex-China Advantage Narrows

[SMM Analysis] Steel Export Price Spreads Diverge: Billet Strong, HRC Weak, Ex-China Advantage Narrows

• Price Spread Fluctuations

On the price spread model, China’s HRC (FOB) remained deeply inverted relative to core ex-China markets, moving sideways this week. For the week of Aug 21, the China−India spread was about −$31/mt (narrowing $2 from −$33 on Aug 14) — India’s export offers were flat WoW, while China’s edged up $2, slightly reducing the inversion. Spreads against Turkey (around −$81), the Black Sea (around −$11), and Indonesia (around −$16) also stayed inverted. With mild upward moves in both ex-China and China offers driven by cost increases, the overall price spread matrix continued to point to "China’s resources as relatively low-cost."

Data source: SMM

• By-Product Trends

1. Billet: inversion persists, spread widens. The "China-Indonesia" billet spread stays inverted. Indonesia is inclined to hold prices firm, while some domestic mills still ship at relatively low prices; with the two ends diverging, the spread widened WoW and China's export competitiveness edged up.

2. Slab: domestic warms up, spread widens. Domestic slab offers have warmed recently, and the recovery in sentiment widened the "China-Indonesia" slab spread WoW — a marked repair from the earlier deep-inversion phase, with the curve moving toward the zero line.

3. HRC: domestic pullback > overseas adjustment, spread narrows. This week China's HRC offer pulled back more than the main overseas export benchmarks (Indonesia / India / Türkiye / Black Sea), so the "China-Indonesia," "China-India," "China-Türkiye" and "China-Black Sea" lines all narrowed WoW, and China's export price advantage converged for now.

• Overall Assessment

Billet and slab still retain some export-order appeal on the "China-Indonesia" deep inversion and its recent repair; on HRC, domestic price recovery narrows China's concession room vs overseas at the margin. Meanwhile, structural spreads between overseas markets (India-Türkiye, India-Black Sea, Türkiye-Black Sea) stay firm-to-soft and choppy, so China's relative advantage in third markets is converging near-term; going forward, closely track the sustainability of the domestic price recovery and the pace of overseas order intake.

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