Global View on Billet: Demand slack as most buyers resist uptrend until September

- This week, in the major billet markets suppliers have been trying to increase prices further, though they have faced a lack of success as most buyers have not been ready to accept higher prices in the slow month of August. Most of them believe that a rebounding trend should start in September on the back of better fundamentals, while now only firmer scrap is providing support. Most deals and bids reported this week have been heard at significantly lower levels compared to the new offers.

- The Turkish billet market has been silent this week as most market players were trying to see a solid trend in order to calculate their risks before making a sale or a purchase. In the domestic market, the price levels increased to $600-610/mt ex-works, specifically from Kardemir, but the producer received demand only for around 5,000 mt. In the import billet segment, Turkey still prefers ready cargoes in order to minimize risks and the indicative offers for ex-Russia are at $565-600/mt CFR and at $570-575/mt CFR for ex-Donbass. In the meantime, the workable price level for Russian material is at around $570/mt CFR from small buyers, while big customers would aim for below $560/mt CFR. Billet offers from the GCC are at $560-570/mt CFR depending on the region, while Iran and Azerbaijan are at $530/mt CFR and $575/mt delivered, respectively. Generally, the mood in the billet market is positive, but since the import scrap uptrend may be short-lived, buyers are not eager to restock immediately and are trying to avoid overpaying, while the sellers are not willing to go below certain levels, claiming their production costs are high. 

- A number of Russian exporters have voiced official offers at $550-560/mt FOB Black Sea this week, up strongly from the reference price of $510/mt FOB last week. But these new offers from suppliers are far from the real market level. So, the SteelOrbis reference price has been settled at $525-530/mt FOB by the end of the week, up by $17.5/mt over the past week, but down by $5-10/mt from the level on Tuesday this week. In Egypt, there were rumours regarding a 20,000 mt sale at $530-540/mt CFR, but most market players believe this information is either false or the deal was concluded a while back. The offer levels from the CIS were at $560-570/mt CFR before the scrap price increase and are now estimated at $570-585/mt CFR at least. But the tradable level is again at $560/mt CFR at best.

- Iranian mills have recently been the most active in sales in the international market, with a number of deals that came to light early this week. A 40,000 mt 130 mm billet sale was done by the major Iranian steel mill to the GCC at $470/mt CFR. With freight assessed at around $30/mt, the FOB price is estimated to be $440/mt. The price is around $20/mt lower than the supplier managed to get in a sale last week. In addition, this week another billet cargo for 40,000 mt has been sold by another Iranian steel mill at $500/mt CFR to Indonesia, with the FOB price estimated at $440/mt FOB likewise, taking into account the freight rate at $60/mt. These deals are in addition to a contract for 30,000 mt to China at $505/mt CFR last week. So based on these deals, the tradable level from Iran has been lowered to $440/mt FOB from last week’s level of $440-460/mt FOB. 

- But by the end of the current week, the reference price has returned to $440-460/mt FOB as mills, seeing a rebound in ex-Russia prices, have also been trying to achieve somewhat higher levels. Iranian steel mill Esfahan Steel Company (ESCO) is reported to have floated an export tender for 30,000 mt of steel bloom of 200 mm size. The final price has been heard at $470/mt FOB, which is partly connected with the specific size of the material. The material is destined to for Southeast Asia. For the common 150 mm billet, the targeted prices of mills are at $460-465/mt FOB. 

- Foreign billet suppliers have been insisting on higher prices in China, following gradual gains locally in China. Even though demand from China has not improved much, rare deals have been signed at higher levels. SteelOrbis’ tradable level for imported billet in China has increased to $505-513/mt CFR, up by $4/mt compared to last week. A contract for a small volume of 3,000 mt of ex-Japan billet was heard at $513/mt CFR early this week, while on Friday another 3,000 mt of billet has been traded to China at $507/mt CFR. Though prices are in line with the tradable level in China, most suppliers have been not ready to provide such low prices. 

- Major Russian suppliers have been offering billet to China at $520/mt CFR at the lowest and at $525-535/mt CFR to Taiwan. Offers are $5-10/mt higher than levels reported early this week.

The last deal for ex-Russia billet to Taiwan was done at $500/mt CFR about 10 days ago with no new bookings done as suppliers insist on higher levels, while buyers bid at $495-505/mt CFR.

Ex-ASEAN offers to China are at $535-540/mt CFR at the lowest, being out of any range of interest of buyers. 

- In the major Southeast Asian market, the Philippines, most offers for EAF/BOF billet from traders and mills have been stable compared to last week at $540-550/mt CFR. The lowest end of the range still corresponds to 3SP and from traders, while most ex-ASEAN mills have been asking for $545-550/mt CFR or higher. A deal for ex-Malaysia billet has been discussed in the market at $540/mt CFR Manila over the past week, but this could not be confirmed by the time of publication. Most sources said that it is too low for any mill, while sources in the Philippines said that the price is good for a trader. A major Indonesian mill has decided to cut its offer price, which had hit its highest level of $525/mt FOB last week, to $515/mt FOB this week. This price translates to around $545/mt CFR Manila, taking into account the slightly decreased freight in the region. Some ASEAN mills have still been holding official offers at $520-530/mt FOB, but in the current market conditions these levels have been called “not realistic.” 

- Ex-India billet prices have slipped to $470-480/mt FOB, down from $480-510/mt FOB last week. Though most local mills maintained their target price at $480-510/mt FOB, the latest bid in a state-run mill’s tender was at $470/mt FOB, reflecting the highest possible tradable level for now. Many Indian mills have been holding back trades expecting buyers to settle for prices above $500/mt FOB as the supply of cheap ex-Russia volumes in the Asian region was seen to be easing after some deals, and the overall mood has been indicating a possible price rebound.