Global View on Billet: Bearish mood prevails, but supply disruptions and rise in Chinese futures may give support

Prices in the global billet market have been slightly lower this week as seasonally weak demand has been exerting pressure and negative sentiments have prevailed. However, the recent stoppage of shipments from the Black Sea due to war-related risks and the slowdown of ex-Iran exports may lead to a significant reduction in cheap supplies in the global market. Moreover, after the previous slide in prices, it seems that the downward trend in China has come to an end for now.

Ex-China and ex-ASEAN billet prices have posted further declines this week, with some active negotiations held in the regional market and in the MENA region. The SteelOrbis reference price for ex-China billet has lost $2.5/mt over the past week, coming to $450-455/mt FOB. A deal has been heard at the lower end of the range, but some Chinese traders have been selling in short positions. According to market sources, a sale of Chinese billet has been rumored to Turkey at below the $500/mt CFR mark, which translates to slightly below $450/mt on FOB basis. However, market sources agree that this may be the bottom for some time as the raw material prices in China together with futures prices have posted a rebound in the second half of the week.

The Indonesian mill has been offering for October shipment at $456/mt FOB, down by $4/mt from last week. Though no new trades have been confirmed for billet, at least one lot of Indonesian slabs is heard to have been sold at $460/mt FOB to India. The price is $10/mt lower than that voiced by the mill last week.

Billet trade has been rather slow this week in Turkey, with the main issue discussed in the market being the lack of prompt shipment cargoes due to the situation regarding Russia's Black Sea and Azov Sea ports and renewed issues in the Strait of Hormuz, which have restricted bulk billet cargo availability from Iran. Due to the war-related crisis in the Black Sea and Azov Sea, maritime and port operations in the region are almost at a standstill, with low possibilities of finding vessels and obtaining insurance for cargoes. As a result, no billet offers have been reported to Turkey from Russian suppliers, while the theoretical CFR level would be at around $485-495/mt CFR by the end of the current week. With freights reaching $40-50/mt for small lots, even though there is no activity the evaluated FOB Russia prices would be at $440-450/mt. However, according to market players' estimations, if there were any business, suppliers would aim to start at close to $455-460/mt FOB, but the levels are considered unworkable. As for Iran, DAP prices have been at $480-485/mt, with small deals still being closed at $470-475/mt, SteelOrbis has learned. No bulk cargoes have been on offer since no fresh lots are on the water due to the situation in the Strait of Hormuz. Ex-China billet offer prices to Turkey have declined to $502-506/mt CFR this week, with one deal rumored at below $500/mt CFR. Still, some sources doubt that these levels will be accepted by buyers since rare bids have been at $485/mt CFR at the highest this week. Offers from Malaysia for 30,000 mt have been reported at $520-525/mt CFR, while Indian material has been on offer at $500-505/mt CFR. Some sources have reported indications from India at as low as $485/mt CFR, which is not considered realistic at the moment, but just viewed as “fishing” by suppliers in the market. Local billet prices in Turkey's Iskenderun region have settled at $540-550/mt ex-works, following deals for 18,000 mt at $533/mt ex-works. In the Izmir region, price levels are at $550-555/mt ex-works and may inch up next week depending on the level of demand.

In Southeast Asia, major offers for ex-China 5SP billet have been reported at $478-480/mt CFR Manila, though some traders have already only voiced offers above $480/mt CFR since Thursday. A contract for Indian IF billet has been rumored at $475/mt CFR to the Philippines, but a few market sources said that they see this as being the lower side in the current market conditions. The lowest price for Chinese 5SP was heard in a deal done to Indonesia at $469/mt CFR last week and this week there has been an offer at $473/mt CFR, also for 5SP. All the low levels heard in the market were for position cargoes.

Ex-India billet prices have remained largely stable over the past week, but by the end of the week a rumor has emerged about lower-than-expected bids in the latest tender held this week. At the same time, large mills appeared to be less aggressive in concluding overseas sales in view of improved demand and slightly better prices in the local market. Sources said that ex-India billet prices have been kept unchanged in the range of $450-460/mt FOB. But in a new tender for 60,000 mt of 3SP 150 mm billet, a bid has been reported at $440/mt FOB, versus the previous level of $455/mt FOB. There has been no confirmation of whether the producer accepted such a low bid.