Market players in the Philippines’ import billet market are evaluating the changes that may happen in the short term and longer term regarding possible losses of ex-Russia supply as some signs of problems with LCs on already booked Russian cargoes have started to be discussed in the market.
“There are problems with already sold cargoes for which the LCs have been established,” a Singapore-based trader said, adding, “I don't think buyers can find a substitute for March-April shipment cargoes.” The Philippines is highly dependent on ex-Russia billet supply, and the allocation from other suppliers for these shipments is unavailable. So, the concerns exist regarding short-term supply disruptions.
But some buyers in the Philippines are saying that they are not seeing a large problem, at least for now. “Technically speaking, there is no problem because there is no sanction on steel. There is only one bank which is taking a precautionary move on LCs,” a trader from Manila said. “There are no problems that I have heard,” a re-roller agreed.
A large trader having “a pending shipment from Russia” at the moment said that there are “just some concerns regarding banking channels restrictions. We can always transact via others.”
“Right now, business is as usual,” another big trader in Manila said. “But traders are trying to change some conditions in the LCs. Something with payment in case LCs will not be allowed, so some may pay cash against documents,” he added.
Though the short-term problems with getting ex-Russia shipments and the next deals are widely discussed, the longer-term expectations of market sources are more similar. “There will be issues [in shipments] as the Philippines is heavily aligned with the US. But I think it is short term.
The current situation is unsustainable for long. Despite sanctions, buyers in the Philippines have imported from Iran also on a number of occasions. They will face problems for some time and then will likely find a way to work around,” a trader said.
In 2021, Russia was the largest billet supplier to the Philippines, with almost 40 percent of the market share in the total of over 2 million mt of imports to the country, with Vietnam in second place with a 25 percent share.
Moreover, the dependence on Russia is also commented on in terms of the preference for 125-130 mm billet over 150 mm billet in the Philippines. “There are not many options [for 130 mm billet]. India and Vietnam, Malaysia and Japan sometimes but in limited quantities: Thailand, but it is induction furnace billet. That's it from Asian mills,” a source said, adding that some may also come from the Middle East.
For now, buyers from the Philippines are not ready to accept much higher billet prices. Traders have been evaluating the prices for position cargoes at $725-730/mt CFR and some at $740/mt CFR, mainly for ex-Indonesia billet. No ex-Russia offers from mills are available.
The SteelOrbis reference price for imported billet in Southeast Asia (except ex-Iran) has increased indicatively to $710-720/mt CFR, versus $700-710/mt CFR last week, mainly based on buyers’ rare bids and price ideas, while offers from the sellers are either much higher or absent nowadays.