Global View on Billet: Downtrend accelerates in some markets as demand poor

- Negative expectations have been gaining momentum in the global billet market this week and prices have slipped in most outlets. The main reason for this has been weak demand and strong expectations for further declines by the end of the month. The strongest price fall has been seen in Turkey’s import market mainly due to the sharp drop in offers from Russia as Russian suppliers have started to become desperate, trying to push volumes in the export markets.

- Ex-Russia billet prices started to fall from the very beginning of the week and lost $30/mt on Monday to $750/mt FOB. Offers have continued to fall as traders and mills have been trying to attract cautious customers, mainly targeting the Turkish market. 

Just a day after, after new deals to Turkey and Tunisia were disclosed, prices for ex-Russia billet lost $27.5/mt coming to $715-730/mt FOB. A buyer from Tunisia purchased around 10,000-15,000 mt of ex-Russia billet at $780/mt CFR, with around $60-65/mt in estimated freight. Egyptian buyers are said to be inquiring, but it seems that the issue with LC payments, which are obligatory, is the big problem when working with Russia. Certain traders who work with Donbass, Iran, and now Russia, may find a way, but it certainly will take time.  Aside from North Africa, a 50,000 mt billet inquiry has been reported in the market from a Saudi Arabia-based buyer. 

And by the close of the week, ex-Russia prices have declined by another $7.5/mt, resulting in a total weekly loss of $65/mt, which is much more than the $15/mt decrease seen last week. The new billet prices have already been fixed in rare deals to Turkey. Most market sources believe that the downtrend will continue, given the lack of resolution of problems with payments and shipments from Russia for most buyers.

- The Turkish billet market remains flooded with offers from Russia and most Russian suppliers seem to have become more and more desperate to sell. According to Turkish sources, the sellers of Russian billet, namely, Amesco, Abinskiy and Novorossmetal, have been active in their offers to almost every customer, cutting offers from $780-800/mt CFR and above early this week to $770-780/mt CFR and even to $750-760/mt CFR from some of them on Friday. In the meantime, around 16,000 mt of ex-Russia billet in total have been recently sold by DLT company. Some buyers from Zonguldak and Izmir agreed to buy at $770-774/mt CIF/DAP, mainly with cash upon delivery payment, which the company has been using for payments for a while. 

- Bearish sentiment has persisted in the import billet market in Southeast Asia too and, even though prices have been going down very gradually (the tradable level is down by just $2.5/mt on average over the past week), most sources are expecting a further decline next week when customers will come back from the holidays. The bearishness in the market has not been overcome even by the recent announcement of an export duty for ex-Iran billets. Offers for EAF and BOF regional Asian billets have been reported mainly at $815/mt CFR Manila this week, down by about $5/mt on average from last week, but the tradable level is not above $810/mt CFR. A deal for ex-Vietnam billet (EAF, according to sources) has been done at $805-810/mt CFR to South Korea. Bids from customers in South Korea and the Philippines have already slipped to $790-800/mt CFR, given the bearish mood in the market. 

- Prices for ex-China billet were stable early this week, but by Friday they have declined by $10/mt to $780-790/mt FOB. The return of ex-China billet purchases in Asia is still in doubt as, with the current freight, the lowest possible level form China is still too high for buyers in Southeast Asia - at $815-820/mt CFR and above. Moreover, the number of offers is still limited as suppliers are still not sure if the government is going to impose export duty. Local billet prices in China have been fluctuating in a limited range, but are slightly lower than last week (on Friday the average ex-warehouse price was RMB 28/mt or $4/mt below a week ago). 

- On April 11, the deputy minister at the Iranian Ministry of Industries and Mines in Iran announced the decision to impose export tariffs on various products, including billets, aiming to secure sustainable supply to the domestic market. Even though the issue in question remains controversial, amid much uncertainty, certain consequences are expected to be seen soon. 

Though some Iranian steel mills have decided to postpone the deadlines of tenders and to see how the new measure will work, by the end of the current week, the results of two tenders have been leaked to the market. In particular, one tender for 40,000 mt of steel billet, for May shipment, has been closed at $695/mt FOB, while another auction for 30,000 mt of steel billet, for May shipment likewise, has been closed at $696/mt FOB. Although ex-Iran steel billet prices have increased slightly over the past week, the current levels are lower than Iranian suppliers had targeted in their sales this week. Specifically, at the beginning of the current week some Iranian sources evaluated the tradable levels for ex-Iran billet at above $700/mt FOB. 

- Ex-India billet prices are down $5/mt over the past week to $730-740/mt FOB. The price reflects the tradable level, while no fresh deals are reported for now, with several market participants claiming that the large volumes of ex-Iran and ex-Russia material purchased over the past few weeks in Asia and the MENA region put pressure on prices.