Global View on Billet: Asian market on the rise, though buyers resist and mood still weak in Turkey

- This week, prices for billets, at least in the one major outlet in the global arena, have posted a visible increase, supported by the positive situation in China with its recent production cut announcements. At the same time, prices have gained only in offers for now, as buyers are still looking for cheaper alternatives. And overall sentiments in other major outlets, like Turkey for instance, have remained bearish with the recent decline in bids and scrap prices.

- The SteelOrbis reference price for ex-China billet has increased to $510-530/mt FOB with the midpoint at $520/mt FOB, up by $15/mt over the past week. Most market sources have said that rare offers for Chinese origin billet are at $520/mt FOB and some claim even at $530/mt FOB. Following the rises from China, the main Indonesian mill has increased its official offers to $515/mt FOB, up by $10/mt over the past week. A few market sources have confirmed that Dexin Steel has still some part of August shipment billet. The rises in the export prices of Chinese and Indonesian sellers have resulted in a surge in traders’ offers for Asian origins to the Southeast Asian market. Most offers from traders for 3SP/5SP billet to Southeast Asia have been reported at $520-540/mt CFR Manila, versus $515-520/mt CFR and the workable level of $510-515/mt CFR last week. But no deals have been reported at higher levels to the region so far.

- The steel production restrictions in Tangshan in China’s Hebei Province announced on July 4 are expected to be tightened in the last ten days of the month, according to unofficial information shared with SteelOrbis by market sources in the region on Monday, July 24. During the July 21-31 period, the production activities of 13 blast furnaces will be halted in Tangshan, a major steelmaking hub in northern China, which will affect a daily capacity of 58,000 mt of molten iron.

- The recent bookings for import billet in Southeast Asia have been confirmed at the previous low level or even with a slight further decline, even though most major suppliers from China and the ASEAN region have been hiking their offers. A deal for 20,000 mt of ex-Saudi Arabia billet has been done to the leading buyer in the Philippines at $512/mt CFR, which is in line with last week’s reference price of $510-515/mt CFR. The SteelOrbis reference price for import billet in Southeast Asia has been settled at $510-520/mt CFR this week, slightly up by $2.5/mt on average mainly because of higher offers from Asian suppliers at $520-540/mt CFR, while the tradable level is still at $510-515/mt CFR. And since Russian Black Sea suppliers have started to be more active in negotiations this week, there are expectations that pressure will remain on prices.

- Russian billet prices have softened further this week due to buyers’ low bids and generally slack interest in buying, particularly in Turkey. The latest workable price level in this market was fixed at $465/mt CFR for a small lot, while the offers mainly stood at $468-475/mt CFR this week versus $450/mt CFR in rare bids. In Egypt, according to sources, a 30,000 mt Russian billet cargo has been booked at $440/mt FOB, which reflects the higher end of the benchmark price as of today. The SteelOrbis reference price for ex-Russia billet is at $435-440/mt FOB Black Sea, down by $7.5/mt. However, many believe that this could be a temporary bottom for the billet pricing, given the limited allocation. Some of the sanctioned Russian suppliers have chosen to turn to the Asian markets, while some are mainly focused on local longs sales, which are more profitable than selling to Turkey. In addition, the price gap between import billet and Turkish rebar has increased to over $100/mt, while the rolling cost is estimated at around $40-45/mt. Turkish steel producers are mainly focused on scrap bookings, while re-rollers are waiting for firm domestic prices for billet in order to compare them with import prices. The latest domestic indications have been heard in the Iskenderun region at $535/mt ex-works in sales, while the general level is estimated at $525-540/mt ex-works. Similar levels are also available for billet exports from Turkey, with naturally no interest from customers.

 - Iranian steel billet exporters have managed to sell some cargoes this week, but buyers have insisted on sizeable discounts, despite some market upturn in Asia. According to sources, a 30,000 mt cargo was sold at $462/mt FOB for August-September shipment, but the price includes an extra for high manganese. Another 10,000 mt lot has been sold at $455/mt FOB for the same shipment term. The level in these deals means a price decrease of $15-20/mt from the previous sales, which were concluded last week. The freshly booked cargoes are expected to be directed to Asian markets, where the CFR price at $500/mt for Iranian origin (taking into account around $45/mt freight) is considered workable.

- Ex-India billet prices are at $500-515/mt FOB, posting just a slight increase from $500-510/mt FOB seen as the tradable level last week. No deals have been confirmed over the past week and government mills did not float any export tenders. The lack of selling interest was attributed to expectations of a revival in workable prices after reports of ex-China prices firming up. According to at least two in trade circles, an Odisha-based integrated mill submitted two spot offers of 20,000 mt each at $515/mt FOB but did not proceed to convert them into sales at bids hardly above $500/mt FOB. In the local Indian market, the downtrend has continued.