Although scrap prices in the US surged in August, the increase did not rub off on US billet prices. In fact, with weak demand and dropping iron ore prices (which has, in turn, started to drag down international scrap prices), most US mill offer prices for billet (mostly for export) are now in the range of $560-$570/mt FOB mill--a decrease of $20/mt on the low end and $30/mt on the high end from last month. Outside the US, offer prices are available to international buyer at about $20/mt less than US export prices from most sources, but traders tell SteelOrbis that even generally competitive sources such as Russia are not selling much at this time--re-rollers are waiting until billet prices hit bottom before making a move.
However, declining prices are not the only reason demand for billet is weak--according to sources, one of the major reasons is that China is offering rebar and wire rod to international markets at such low prices that in some cases it is cheaper to buy finished long products from China than to buy billet elsewhere and convert into long products domestically. Until the Chinese market sees some sort of a turnaround, sources expect the billet market in the US and beyond will remain soft.