Global View on Billet: Cautious rebound in prices, but still lack of demand so far

Cautious optimism has prevailed in the global billet market this week, supported by some gains in the scrap market in Turkey and expectations for better demand from the middle of October. However, for now the response from customers is still weak.

The number of import billet offers remains scarce from Russia, mainly due to the fact that most of the mills in the southern part of Russia are currently not operating. Sources report the recently announced military mobilization and earlier experienced financial issues and debts are the main reasons for the halting of production. Mills lost 30-40 percent of workers to the army and around 20-30 percent are trying to flee, according to sources. The billet flow from the Donbass region has also been limited. As a result, some suppliers are just watching the market, while only a few are offering their billet from previously piled up stocks. In the meantime, the firmer scrap prices in Turkey have become a reason for a certain price optimism in the billet segment as well. The ex-Russia billet reference price has increased by $10-15/mt to $515-530/mt FOB Black Sea with the midpoint at $522.5/mt FOB. The lower end of the range corresponds to the lowest levels heard to North Africa, Tunisia in particular, from last week, and the tradable level in Turkey. The higher end corresponds to Russian sellers’ targeted level.

In the import segment in Turkey, a small billet sale was reported to have been closed to Turkey early this week at $540/mt CFR, but now the workable levels are estimated at $550-560/mt CFR. Some sellers comment they would offer $560-570/mt CFR minimum to the Black Sea and Marmara regions of Turkey. One Russia-based supplier is in the market with ready cargoes at $580/mt CFR in initial offers, but may be ready to sell at $570/mt CFR.

Despite quite a silent week, by the end of the current week Iranian suppliers of steel billet have become more determined in searching higher prices in new transactions, seeing gains in ex-Russia billets and some scrap price increases. Apart from the fact that the situation in the major markets still remains unfavourable due to weak demand and lower bids, the positions of Iranian steel suppliers have been shattered by the unfolding political turmoil. The latest sale of ex-Iran steel billet confirmed by SteelOrbis was at $456/mt FOB BIK done by a major Iranian steel mill. By the end of the current week, a few sales of ex-Iran steel billet at $463/mt FOB BIK have been rumoured, but with no confirmation so far.

Bearish sentiments have been prevailing in Southeast Asia’s import billet market, but most major suppliers from the ASEAN region have not been ready to cut prices much, expecting some rebound after the long Chinese holiday. As a result, the majority of customers in Southeast Asia have focused on purchases of cheaper IF billet or ex-Iran billet. There have been reports of the latest deals for ex-Malaysian IF billets at $525/mt CFR Manila or just slightly above, which is better than offers for EAF/BOF billets from the ASEAN region. At the same time, ex-ASEAN EAF/BOF billet offers mainly from traders have been heard at $542-550/mt CFR to the Philippines, while offers from mills have been at $550/mt CFR and above. Taking into account the last sales of IF billets, buyers from the Philippines will insist on prices not above $535-540/mt CFR for EAF/BOF material.

Local billet prices in China have improved just minimally over the past week and demand is still not high, which has left billet imports at a standstill. At the same time, offers for imported billet have dried up, as suppliers have either been targeting higher levels, too far from Chinese bids, or do not have much allocation for now. The SteelOrbis reference price for imported billet in China is at $475/mt CFR this week, stable from last week, though overall imports remain halted since the tradable level is still far below $500/mt CFR. Most major exporters, Iran and Russia, have not been active in offering billets to China. Nominal offers from Russia have been at $540-550/mt CFR China, being entirely uncompetitive in the country and also too high for customers outside of China. Offers for ex-Iran billets have been limited with traders’ most recent price idea at $505/mt CFR.

Ex-India billet prices have been largely maintained unchanged even as trading came to a halt with high prices unacceptable to buyers, while sellers supported by the steady uptrend in local sales have been unwilling to adjust overseas sales prices to push deals. While ex-India offer billet prices have been maintained at $500-510/mt FOB, buyers from Asia and the Gulf region are reported to be submitting bids in the range of $470-480/mt FOB, making deals unviable.