Global View on Billet: Downtrend accelerates, firm prices seen only in China

- The situation in the global billet market has worsened in early July and prices in the major sales destinations have softened due to slack demand, still ample supply, and the lack of bright expectations in the scrap segment. In some markets like Turkey, the pace of the decline has been much bigger than before. The only market that has been relatively stable lately is China, where export prices have inched up and the local prices have been fluctuating in a limited range.

- Russian billet producers, who have not many options regarding where to export their materials other than Turkey, have been forced to drop their prices by $27.5/mt over the past week to $480-485/mt FOB as per the SteelOrbis daily reference price. In fact, the decline in Turkish rebar prices despite a relative stabilization of import scrap prices has put pressure on the billet segment. In the domestic market, the workable level is evaluated at around $550/mt ex-works, versus $570-580/mt ex-works in recent indications. Integrated producer Kardemir managed to sell medium volumes early this week at $565-570/mt ex-works, but mainly due to a deferred payment option.

As a result, the pressure in the Turkish market pushed import billet prices from Russia and Donbass first to $520-530/mt CFR with a deal at the lower end, and later to $508-510/mt CFR in deals for around 12,000 mt of billet for prompt shipment. Moreover, by the end of the week, the levels of $500-505/mt CFR have become more visible.

Along with Russia, Turkey has been receiving offers at $535-550/mt CFR from Asia and at $540/mt CFR from the GCC. Algeria has set the highest price for now at $580/mt CFR, offered via traders.

- The main Indonesian mill has cut offers further, to the levels fixed in the latest deals. This decline has been explained by lower tradable levels in the Asian region, where the latest bookings have been done, compared to other destinations where the Indonesian producer was selling in earlier weeks. Offers prices for 3SP and 5SP billet from Indonesia were reported at $500-505/mt FOB on July 4, down from official offers at $510/mt FOB last week, when the mill dropped offers sharply by $15/mt, meaning that in total prices have lost $20-25/mt over the past two weeks. After bookings for 60,000 mt of ex-Indonesia billet sold at $500-505/mt FOB last week, this week additionally at least 40,000 mt have been traded at around $500/mt FOB.

Malaysian suppliers are still interested mostly in finished steel sales. But offers to traders, who can buy billet together with wire rods (priced at $535-540/mt FOB), have been voiced at $510-515/mt FOB for August shipment. For September shipment, the main supplier from Malaysia is going to increase prices again, to $520-525/mt FOB.

- Ex-China 3SP billet reference prices have been reported at $500-520/mt FOB, up by $5/mt on average from late last week. Though a number of customers are still able to get material from China at $500/mt FOB with firm bids, some suppliers have been voicing higher offers due to lower allocations. The firm trend is China has been assessed as rather positive in the current negative global market conditions. However, market sources believe that China being relatively stable is not enough to provide significant support even to other neighboring markets. A number of customers in Thailand and Indonesia have reported Chinese traders’ offers for ex-China or ex-Iran billet at $516-520/mt CFR, signaling that traders still have mainly bearish views and can offer in short positions. 

- Trading activity in Southeast Asia’s import billet market has been slow this week and, though some suppliers have been trying to increase offers, the tradable level has remained at lower level, as fixed in the latest deals. The SteelOrbis reference price for imported billet in Southeast Asia (includes only EAF and BF billet) has settled at $520/mt CFR. Most offers for 5SP billet for both IF and EAF/BF billets have been voiced in the Philippines starting from $525/mt CFR. But the tradable level was at $520/mt CFRR, fixed in a deal for 20,000 mt of ex-Indonesia material done last week. Now buyers are targeting $515/mt CFR.

- Iran has been slowly coming back from the holiday period and new tenders have been opened. Particularly, according to sources, Khorasan Steel Company has floated a 30,000 mt tender, while Esfahan Steel Company has been considering putting around 25,000-30,000 mt up for sale. The anticipated price levels are at around $490/mt FOB for now, although, if purchased, the traders would be able to sell this material for a profit only in the GCC region. However, the market in the UAE and Oman has also been dull. In addition, one of the traders has been offering a 10,000 mt billet cargo at $487-488/mt FOB for a two to four weeks delivery term. It is worth mentioning that Iran may be facing a certain shortage of billet export volumes and will try instead to boost raw materials sales, including pellets and DRI. The main reason is the limited supply of electricity for industrial usage as traditionally happens in Iran during the summer months.

- While the Indian government mills retreated and no new export tenders have been floated during the past week, private mills were heard to have submitted offers in the range of $500-510/mt FOB, with some slight discounts on these levels also possible, compared to $510-530/mt FOB a week ago. But with bids submitted at still lower levels, no trades have been confirmed in the market. In the Asian region, cheaper alternatives have emerged for ex-Russia and ex-Indonesia material, while business activity is still to pick up in the Gulf after the holidays last week.