Global View on Billet: Bullish mood after May holidays not expected to ease anytime soon

The global billet market has improved in the first week of May, and most market sources agree that there will be no rollback anytime soon. The improved sentiments are due to the Chinese market starting to be fundamentally better after its holiday and owing to demand in major outlets, which is expected to strengthen, while there is no cheap availability in the market.

The Chinese billet market opened after the Labor Day holiday on a very positive note amid rises in futures prices, as well as firm increases seen in raw material prices (iron ore with 62 percent of Fe content is above $112/mt CFR now). The SteelOrbis reference price for Chinese billet has added $10/mt compared to late last week before the holiday and is up $12.5/mt over the past fortnight, to $480-490/mt FOB. Demand for rebar and billet is expected to remain firm in the coming few weeks as buyers will replenish stocks, which has pushed up local prices. So, suppliers are bullish in their offers to the export markets, even though the overall supply volume for the international market will be stable in May compared to April.

There was a lack of new offers of Chinese billet to the GCC, but market sources expect increases of $5-10/mt compared to the previous price levels. The tradable level for Chinese billet is assessed at $535-540/mt CFR. But there was information that an Indian mill has managed to sell 50,000 mt of 3SP/4SP 150 mm billet for further sale to the GCC market with the CFR Oman price estimated at $520-530/mt.

The Indonesian mill has increased its billet offer by $5/mt to $490/mt FOB for August shipment. It is out of the range of interest of any buyers due to the shipment period, though the price could be workable for some destinations like the Middle East, for instance. At the same time, the producer cut its slab offer by $10/mt to $530/mt FOB for July shipment to accelerate sales.

In Southeast Asia, most offers for ex-China 5SP 150 mm billet have been starting from $505/mt CFR Manila and up to $510-515/mt CFR for 130 mm billet, while before the holiday most offers were at $500-505/mt CFR and a sale was done at $498/mt CFR at the highest. Deals are not seen yet, but I think $505/mt CFR has already been assessed as workable, when buyers will need to replenish stocks. Late last week, one deal was rumored to have been done to Thailand at $495-498/mt CFR for Chinese 3SP. This was already an increase of $3-5/mt from the previous booking, but still any level below $500/mt CFR is assessed as being too low for the current market conditions.

Local billet prices in Turkey have settled at $555-565/mt ex-works mainly in the Iskenderun region and, while some negotiations are underway, no fresh deals have been reported. One of the mills in the Izmir region has issued its billet offers at $580-585/mt ex-works, after its latest sale to Italy at the upper end of the range. Locally, such a level is not considered workable. There was also much talk about a deal to Latin America, but it turned that the negotiations are still ongoing. Sources estimate a possible price once again in the range of $580-585/mt FOB.

Import offers from China to Turkey after the Labor Day holiday have mainly been at $535-537/mt CFR, with one trader offering at $550/mt CFR, which is considered to be overpriced. Sources expect that some demand may be seen at $520/mt CFR, or maybe slightly higher, from the regular customers. Ex-Malaysia billet is not offered firmly at present, while the indications from Indonesia are evaluated at $540-545/mt CFR minimum, but for late August shipment. Ex-Ukraine indications to Turkey are at $580/mt CFR for June shipment, while Ukraine is enjoying higher-priced sales to the EU.

Most billet offers from Russia and Donbass have been reported at $510-515/mt CFR for June shipments, with the levels considered to be quite workable for those seeking small lots for prompt shipment. In addition, a large lot, according to sources, has been sold to Turkey’s Marmara region at $508/mt CFR, with the same lead time. The SteelOrbis daily reference price for Russian ex-Black Sea billet is now set at $480-485/mt FOB, up $2.5/mt on average over the past week.

The supply of billets from India to the export market has increased over the past two weeks. Government-run steel producer Rashtriya Ispat Nigam Limited (RINL) has held two new tenders aggregating 90,000 mt. This came close on the heels of RINL’s two tenders also aggregating 90,000 mt which expired in the past week, with reports indicating that the highest bids received did not exceed $440-450/mt FOB, far below the seller’s expectations. But, unlike last week, it seems the producer is more successful this week. There is talk that one tender has been closed with 50,000 mt sold to the GCC market with the price heard at $475-480/mt FOB or just slightly lower. This information has not been confirmed by the time of publication, but market sources agree that this price is possible for the GCC market and that demand is there. Before this, an eastern India-based integrated mill reported a sale at $460-470/mt FOB.

Local prices in India have declined by around INR 300/mt ($3/mt) over the past week to INR 44,700/mt ($469/mt) ex-Mumbai.