Global View on Billet: Both prices and demand weaken, outlook not good

- The global billet market has been weakening this week in terms of both prices and demand. Buyers in most major import markets have been insisting on declines amid the recent retreat in the scrap segment and bearish moods. At the moment, the market is customer-driven with a lack of demand and sustained supply. Nevertheless, the latest price losses have not been very sharp in the most export markets as suppliers are evaluating allocations and the outlook.

- The major sales destination for CIS-based billet exporters has been the MENA region. Weak scrap prices and lower bids from traders and end-users have put pressure on prices, which has resulted in a slight decline in deals. A deal for ex-Russia billets has been heard to a trader at $605-610/mt FOB with the final destination expected to be Tunisia. Also, a contract for 30,000 mt from a large Ukrainian producer has been signed at around $605/mt FOB on average with the final destination said to be the MENA region. In Egypt, negotiations for ex-CIS billet have been in place at $660/mt CFR, but no deals have been reported so far, and the price is also $10/mt below the highest level seen in late November. 

- The Turkish square billet market has remained mostly silent this week as negotiations have been mainly reported as talks rather than serious business. The currency situation still weighs on business activity and most buyers have been choosing to wait instead of purchasing. In addition, ex-Russia sellers for small lots are expected to be in the market soon and are not yet offering, while their prices are usually considered as the most competitive in the market. Import billet prices have decreased by $10/mt from the upper end over the week to $650-665/mt CFR while bids are mainly at $630-640/mt CFR. There has been a deal for 10,000 mt of wire rod grade billet at $635/mt FOB with the freight calculated at $35/mt on the average. However, this deal is considered by many as an exceptional one in terms of price. In the local market, prices are at $685-690/mt ex-works as per the indicative voiced levels.

- Major billet exporters to Southeast Asia have started to increase offers this week, seeing revived activity last week. But most buyers have not been ready to accept a hike, still seeing negative signals from China and waiting for prices to come back to their declining trend. As a result, the tradable level has remained at $640-650/mt CFR in Southeast Asia this week, though offers have been mainly at $660/mt CFR. No new deals have been reported to the Philippines recently after two major mills based in Russia’s Far East region sold sizable lots, up to 95,000 mt in total, according to some estimations, at $640-650/mt CFR. 

- The situation in the Chinese billet market has remained unfavorable for overseas sellers as, even after some brief revival in local prices seen over the past week, the tradable value has been too low for sellers. The highest bids for imported billet have been at $610-615/mt CFR for Jiangsu, where ex-warehouse prices are higher, while most customers in the northern part of the country has been assessing the billet price at still below $600/mt CFR. The lowest offers have been reported at $630/mt CFR. Major Southeast Asian mills have been offering at $660-670/mt CFR. 

- Trading for ex-India billet has remained poor, even though the number of inquiries increased. The tradable level has been assessed at $595/mt FOB and some sellers are still turning down bids, supported by the rise in billet merchant sale prices in the local Indian market. Trading circles said that an Indian government-run mill sold some 10,000 mt of 150 mm billet, receiving the highest bid of around $595-598/mt FOB, about $2-5/mt lower than a tender closed earlier in the month. Results for at least two tenders held this week are still unclear with sources saying that it will be hard to achieve any price above $590/mt FOB.

- Notwithstanding their success in trade at high prices about ten days ago, Iran-based billet producers have been forced to accept considerably lower prices in their latest sales. Specifically, with demand from Egyptian steelmakers having been satisfied for now, Iran-based billet suppliers have refocused on obtaining orders in Asia. The most recent tender for 40,000 mt of ex-Iran steel billet, for shipment in January, has been closed at $565/mt FOB BIK. Meanwhile, a cargo of 30,000 mt billet, produced by another Iran-based producer, is said to have been traded at $551/mt FOB this week, though, according to sources, the tender was subsequently cancelled due to the low price, so it has not been included in the reference price level of SteelOrbis.