Global View on Billet: Asian market bearish, very cautious upturn in MENA if at all

 The situation in the global billet market is still complex with the Asian market resuming its downward trend, while in the MENA region buyers have been very cautious despite some suppliers’ attempts to push prices up. Only ex-Iran billet prices have posted visible increases this week, but they had also been falling more rapidly in the previous weeks.  

Ex-ASEAN billet prices have been going down this week despite the absence of price cuts in China. The leading Indonesian mill has cut its offer prices for 5SP billet to $510/mt FOB, down from $520-530/mt FOB last week. And at least one deal was signed with a trader who needed to cover a position. Ex-Malaysia billet is available at $520/mt FOB. Ex-China billet prices have remained at $520-530/mt FOB, but the market mood has worsened again amid weak real estate and PMI data. 

Southeast Asia’s import billet market has remained very weak even though some increase in futures has been seen in China. Limited demand and only low bids have resulted in a further decline in prices in the Philippines. According to market sources, a deal for 5SP billet has been done by a Chinese trader at $510/mt CFR Manila today, in line with the bids heard earlier this week, but down from the reference price at $525-535/mt CFR, which represented most offers for EAF/BF billet. Some market sources said that this was for ex-China billet and that it reflected poor sentiments as a trader did the deal in a short position. However, some other sources believe that this could be IF material or billet with lower manganese content. The SteelOrbis reference price has been lowered to $515-535/mt CFR with the midpoint at $525/mt CFR, down $12.5/mt over the past week. The price represents offers, bids and the recent tradable level, while the lower-priced deal has not been included in the range since the quality of the material has remained unclear. 

More Indian billet sellers led by government-run mills have been active in pushing sales aggressively, providing some discounts. Ex-India billet offer prices have largely been maintained in the range of $495-500/mt FOB, but at least a few sales have been heard at as low as $485/mt FOB, indicating oversupply in the local market where prices had recovered but still remained close to a five-month low. The sources said that, over the past week, there were offer volumes aggregating around 70,000 mt for combined spot and tender-based exports, while even private mills have been active even amid lower price realizations. A government-run mill, which floated an export-based tender for 20,000 mt in the past week, is reported to have received the highest bid of $485/mt FOB. 

The latest export billet deals from Iran have been closed with a $20/mt price increase compared to the previously fixed transaction level. A mill has managed to trade 30,000 mt at $481/mt FOB, sources report. Moreover, other, more regular and larger billet sellers from Iran are now counting on selling at $5-10/mt higher than that. The key reason is the increased number of inquiries from traders, according to Iranian producers. In addition, Iran is expected to experience higher billet production costs during summer months due to the traditional problem with the electricity, particularly its tariffs and availability. However, there are certain doubts that the uptrend from Iran will be easily accepted by the billet buyers. In fact, the bids in Asia are low and continue to fall versus the latest offers at $520/mt CFR Indonesia, while in UAE and Oman the negotiations are hardly higher than at $500-510/mt CFR levels. 

Turkey’s domestic billet market has been quite heavily impacted by the currency rates, although the previous heavy rebar sales, seen last week, were expected to speed up the semis trade. However, no fresh deals have been reported. Local producer Kardemir announced $620-625/mt ex-works billet price according to the official lira rate, but sources evaluate the real price at close to $600/mt ex-works according to the market rate. The supplier has not succeeded in selling any volumes by the time of publication. The producers in the Izmir and the Iskenderun regions are offering $600-605/mt ex-works depending on the mill, while the Marmara region-based seller is offering $620/mt ex-works, which is not considered workable. 

Turkish billet importers, who partially restocked last week in ex-UAE and Russian billet at $545/mt CFR and $548-559/mt CFR, respectively, have been quite slow in talks recently. Although scrap seems to have stabilized for now, the market sentiment has remained tense due to the political issues, exchange rates, and still slow longs exports. China is offering $550-560/mt CFR while Malaysia is at $565/mt CFR minimum, but no deals have been reported. 

Russian billet suppliers have been almost absent in the Black Sea region export market this week. One of the reasons is the limited allocation, while some of the suppliers have preferred not to place any serious offers since there are no parties currently who are much interested in import purchases. Particularly, there have been only some indications for small prompt Russian cargoes at $570-575/mt CFR Turkey versus $558-559/mt CFR, fixed in deals last week. The general expectation for larger Russian and Donbass cargoes and for longer lead time is still at around $550-565/mt CFR. As a result, the current ex-Russia billet price is at $520-535/mt FOB, in line with the past week’s level.