Global View on Billet: Asia resumes downtrend, other outlets inactive or falling too

- The global billet market has posted declines this week as the situation in Asia, where some improvements were seen last week, has worsened again after slowdown of consumption in China. Most other outlets have been either inactive or have been falling as well, reacting to the declines in steel prices and weak demand.  

- Official offers for ex-Indonesia billet have remained at $515/mt FOB, stable after the domestic mill hiked them by $10/mt early last week. But, this week, information about the latest deals has been disclosed. At least 30,000 mt of billet have been traded at around $510/mt FOB to Latin America, and an additional volume of 20,000 mt has been sold to a trader at $508/mt FOB. The previous deal prices were at $500-505/mt FOB, which shows that the market has improved. However, these increases in sales and prices are also because the recent deals have been for distant markets. The ex-China reference price for billet has declined a little, to $510/mt FOB on average, down by $10/mt from last week, with sellers being inactive in offering significant volumes. Since late last week, typhoon Doksuri has negatively affected construction activities in China, while another typhoon, Khanun, has hit China this week, causing floods in Hebei Province. 

- The fluctuations lately seen in China have impacted Southeast Asia’s import billet market, with offers edging up early this week and retreating slightly again subsequently. At the same time, demand has been extremely low in Southeast Asia, with buyers in the Philippines facing the southwest monsoon (Habagat) and heavy rainfalls. The SteelOrbis reference price has settled at $520-525/mt CFR this week, stable from the level reported early this week, but up slightly by $7.5/mt on average from last week’s levels of $510-520/mt CFR. After a deal for ex-Saudi Arabia at around $520/mt CFR (different market sources assess the final price at $519/mt CFR or $522/mt CFR) last week, there have been no new contracts, according to sources. At the same time, offers from traders for ex-Indonesia 5SP billets have been at $525-530/mt CFR by the end of the week, down from mills’ official offers at $535/mt CFR reported earlier this week. 

- In other Southeast Asian countries, negotiations have been focused on ex-Iran billet. A deal for an undisclosed volume has been rumored at $500/mt CFR to Indonesia, but could not be confirmed by the time of publication. This level translates to around $455/mt FOB, fixed in the previous sale by Iranian mill. Offers for ex-Iran billet have been at $505/mt CFR in Thailand, but with no deals reported so far.  

- In the Black Sea region, the trading activity for billet has been stalled this week while the prices have remained weak. Particularly, talks with Turkey-based importers have not resulted in any deals and bids have remained rare. The key reason is customers’ cautious stance regarding restocking, while there is a clear price decline in the rebar segment to levels of $545-550/mt ex-works/FOB. In addition, local producer Kardemir has dropped its billet offers by $15/mt to $510-515/mt ex-works depending on the steel grade and managed to sell at least 25,000 mt, though some state the total volume was 40,000 mt. Similar levels were fixed in deals for billet in the Iskenderun region, while in the Marmara area the indicative offers have been reported at $530/mt CPT. As a result, although scrap prices are considered to be close to bottom levels, the pressure on import billet sellers has strengthened. Earlier this week, rare bids were at around $450-455/mt CFR for ex-Russia and ex-Donbass billet cargoes from traders, versus offers at $460-470/mt CFR. By the end of the week, the number of talks between billet sellers and Turkish buyers has diminished. “There is no interest at all. Traders keep offering and don’t get bids. Mills will start offering soon. Traders will take positions hoping prices will go up after summer,” a trader said. It is believed that for now, if someone needs to sell, the workable price level should be at around $450/mt CFR. However, suppliers are mainly insisting on $465/mt CFR and above, with no sales resulting. The SteelOrbis daily reference price for ex-Russia billet decreased early this week by $5/mt, with the midpoint at $432.5/mt FOB. However, by the end of the week the range has widened to $430-440/mt FOB, $5/mt down on the lower end of the range since late July, due to the almost complete silence in the market and the resistance of certain traders to going below $465/mt CFR. 

- Ex-India billet prices have increased gradually but mainly indicatively, as sellers were seen to be holding back offers and deals, prompted by expectations of the ability to push up prices in key overseas destinations and by surging local merchant sales prices. Ex-India billet prices have moved up by $5/mt over the past week to $505-520/mt FOB. Local billet prices in Indian surged INR 1,600-1,650/mt ($19-20/mt) this week. 

* - $508-510/mt FOB are the latest deal prices