Steel traders in Asia have been feverishly short-selling their cargoes in recent weeks due to the bearish sentiment in the Asian market, with back-to-back offers for steel products often accompanied by short-selling offers at a wide discount to mill cargoes.
These discounts can reach up to $15 per tonne, which indicate the additional price falls that traders expect when short-selling cargoes. Buyers have taken the opportunity to bid at even lower prices, refusing to purchase cargoes and waiting on the sidelines for further price drops. Some buyers only purchased steel cargoes on the condition that the price is fixed on time of port discharge, not loading, in fear of spot prices falling further after they agree on the price with steel mills. Others have bet heavily on spotting price troughs, purchasing huge volumes of long steel at prices that they expect to be the lowest and forgoing purchases for a long period of time.Steel mills do not foresee any uptick in prices going into early 2019 and expect downtrends in the Chinese market to continue, which would further dampen Asian steel prices. This trend is occurring across the entire flat...