Global View on Billet: Declines continue as supply exceeds demand, despite firm scrap

The downtrend in the global billet market has continued this week as overall offer volumes have still exceeded demand, even though scrap prices in Turkey have remained firm. The negative market situation in China has been among the main reasons behind the current price fall.

The leading Indonesian mill cut its billet offers to $428/mt FOB on May 29, down by $2/mt from the previous day and down $7/mt since Monday this week, even after sizable sales last week. According to market sources, at least 240,000-250,000 mt of billets were sold by the mill last week and the trade price level was near $428-430/mt FOB in most deals. A large amount (80,000 mt) was for Vietnam as some major local mills in the country were buying billets instead of producing their own billets, which is not that common for this market. Also, some volumes were purchased for the Southeast Asian market, at least 40,000 mt, market sources believe. Also, a big volume of Asian billet for August shipment was traded to Saudi Arabia at $458/mt CFR, and, though some sources said it was Chinese billet, according to market information a trader may replace it with Indonesian origin material. A small lot of Indonesian billet was also confirmed for the Turkish market, but much less than rumored in the market previously. Ex-Indonesia slab offers have been corrected down by $3/mt to $437/mt FOB by the end of this week.

The ex-China billet reference price has fallen to $415-430/mt FOB, with the midpoint at $422.5/mt FOB, but most offers even late this week are at $415-422/mt FOB. After the drop early this week, the market has stabilized as of May 29 because the US court blocking Trump’s tariffs gave a positive push to the global market. But, in general, the imbalance in the Chinese steel market has remained with production still high and the rainy season starting, which is impacting demand. The outlook for next week is mixed as some market sources believe the prices should stabilize or retreat a bit more with no demand support, but a part of the market hope for a rebound after a short holiday (May 31-June 2).

Billet prices in Southeast Asia’s import market have fallen to the lowest level seen this year, $435-445/mt CFR, due to the downtrend in China. Buyers have been cautious, waiting for some additional discounts. Offers for Chinese 5SP billet to the Philippines have been at $445/mt CFR, while some traders have been offering even lower, at $440-442/mt CFR, which is down significantly from the previous deal for at least 30,000 mt done at $450/mt CFR Manila. Also, offers for 3SP billet to Thailand have been at $440/mt CFR, and at least one Indonesian buyer was in negotiations at $435-440/mt CFR for this grade, which is $5/mt below last week.

In the domestic market in Turkey, billet prices have remained in the range of $500-515/mt ex-works depending on the region, with limited buying activity. The latest deals for small volumes have been reported at $508/mt ex-works in the Iskenderun region. Generally, buyers expect a slight decline to be seen next week, taking into account a certain weakening of rebar prices seen recently.

Turkish billet buyers have been quite interested in imports since last week, most probably needing to restock for July-August shipments, mainly from Asia, while import scrap prices remain firm. In addition, Turkish rebar prices for August-September production are unlikely to go far below $500-520/mt FOB even in the case of worse demand, since mills are controlling production levels. Therefore, buying billet at $463-467/mt CFR, as in the several deals last week, still leaves a margin for Turkish mills, theoretically. This week, there has been talk about a 50,000 mt deal at $450/mt CFR Izmir and some sources reported another sale at $458/mt CFR for an extended payment term. The current offers from China mostly for August shipments are standing at $455-460/mt CFR and slightly above depending on the trader. In addition, according to sources, a 150 mm billet cargo from Malaysia has been available at $490/mt CFR, in line with the latest workable prices from Ukraine. However, the level is considered overpriced today, May 30.

As for Russia, the supply volume remains limited since Russian suppliers do not seem much interested in selling large lots at the currently unfavorable exchange rate. Another reason is the sliding Chinese offers, which are putting pressure on import pricing in Turkey overall. The latest indications for the Turkish market have been reported at $450-455/mt CFR to the Black Sea region, which is netting back to $430-435/mt FOB. Billet prices from Donbass, the Ukrainian territory occupied by Russia, have been at $455-460/mt CFR Turkey, being less competitive. By the end of the current week, the SteelOrbis reference price for ex-Russia billet to be shipped from the Black Sea, has settled at $433.5/mt FOB on average, down from $440/mt FOB last week.

Iranian billet exports have been showing limited trade in the past several weeks, mainly due to the limited supply volume. Taking into account the government’s energy policies, many mills have been forced to cut production significantly and are aiming not to sell the volumes allocated for export at cheap prices. Overall, large mills are aiming to sell not below $420/mt FOB, which is not so competitive against current Asian price levels. The workable level in the GCC is considered to be at $440-450/mt CFR Oman and UAE for Iranian billets, but the buyers have been informing that the number of offers is currently small. Some cargoes are offered at $415-418/mt FOB Bandar Abbas, while small mills are offering at around $410-412/mt FOB, SteelOrbis has learned.

Ex-India billet prices are down to a range of $415-425/mt FOB, compared to $425-435/mt FOB a week ago. The sources said that, unlike the previous week, offers at the higher end of the price range are not working out. Buyers have been seeking “bottom prices” and local sellers have been forced to adjust prices and push exports in reaction to the downturn in local sales. An eastern India-based mill has reported a sale at $420/mt FOB and another tonnage of 20,000 mt for delivery to the Middle East was heard at $418/mt FOB, sources said. A government-run mill is heard to have held a tender for 30,000 mt of billets with the highest bid received at $420/mt FOB.