Global View on Billet: Downtrend reverses this week, further gradual gains expected

- Early this week, prices for billet in most major outlets retreated further, but starting from Thursday the downtrend which had been seen in the global market for weeks has started to reverse owing to rises in Asia, positive expectations in China, and stronger scrap prices. Most market sources believe that the gradual revival in prices may continue in the near future.  

- Prices for ex-ASEAN billet have been fixed at lower levels in the latest deals and in offers, reported in the middle of the week. The leading Indonesian mill has dropped its offers to $490/mt FOB, from $500-505/mt FOB, and a few market sources report that this level was fixed in a deal, though no further information is available about the expected sales destination. In addition, a few deals for ex-Malaysia billet have been confirmed at $495-505/mt FOB for June-early July shipment, while earlier in the week mills’ official offers were at $510/mt FOB at the lowest.  

- But on Friday, June 2, after two days of rises in Chinese futures prices and a strong improvement in sentiment, ASEAN-based mills have started to hike prices. Ex-Indonesia prices have surged by $20/mt to $510/mt FOB, while offers from Malaysian BF-based mills have been voiced at not below $515/mt FOB, up from around $500/mt FOB in deals. This move by ASEAN mills has been expected by market sources amid the stronger signs of a rebound in China, based on expectations of support for the real estate industry by the government, expected next week. The government has been trying to avoid aggressive support measures lately, hoping that the market will regulate itself, but the data show that sales and new construction figures have continued to decline rapidly and this is unlikely to slow down without intervention by the authorities. According to Bloomberg, among the measures discussed is the relaxation of restrictions for residential purchases. The reference price for ex-China billet has increased by $10/mt to $500-510/mt FOB. More active sales in the local rebar and billet markets in China have also provided support for the recent rebound. 

- In Southeast Asia’s import billet market, customers have not been ready to accept price increases this week, but offers have definitely been corrected up. The SteelOrbis reference price for import 5SP billet in Southeast Asia has settled at $510-515/mt CFR on Friday, up by $7.5/mt over the past week. Most bids have still been at $500-505/mt CFR Manila, but traders have been asking for not below $515/mt CFR already, while AESAN mills’ prices were at $530/mt CFR at the lowest on Friday. Only a few deals for ex-China 3SP 150 mm billet have been confirmed to Thailand and Taiwan at $490-495/mt CFR, which is slightly above the discussed levels of $485-495/mt CFR last week. 

- Ex-India billet reference prices have been maintained at $480-495/mt FOB, as settled last week, due to the low demand situation, but sellers have not been willing to continue adjusting offers to push sales or even to agree to sell large volumes at this level. Even government mills, receiving lower-than-expected bids in export tenders earlier in the month, are heard to be holding back fresh export offers until a revival in demand and prices is seen. For most Indian mills, the floor price now stands at $500/mt FOB.   

Following the second round of the presidential election, trading activity in Turkey’s billet market has picked up somewhat this week, despite the ongoing issues with the currency and payments. Local integrated producer Kardemir has traded 37,000 mt of billet at $595-600/mt ex-works depending on the grade, $25/mt lower than the official price in the previous round of sales. In other regions, billet prices have settled at $595-605/mt ex-works with levels around $10/mt higher voiced in the Marmara region. In the import segment, according to sources, a total of around 30,000-40,000 mt of billet have been sold from Malaysia to a couple of Turkish buyers at $540-545/mt CFR, down $10/mt from the official offers last week. The lowest offers this week for the same origin have been reported at $535/mt CFR Iskenderun, but, according to sources, have not resulted in deals. With the mentioned sales, ex-Malaysia allocation for June shipments is not seen and the mill is offering for July, which is too early for Turkey to buy, given the sailing time of around 45 days. Taking into account the recent positive developments in Asia, the new billet offers particularly for Malaysian and Indonesian origins to Turkey are estimated at $550-555/mt CFR.  

Sources indicate the general price increase for billet in Asia may make it possible for ex-Russia and Donbass billet suppliers to avoid further discounts. This week, no seller accepted the $530-535/mt CFR bids from Turkey for the mentioned origins and, moreover, a total of 6,000 mt have been sold at $545/mt CFR for June shipment. Moreover, there is an expectation that the suppliers will target prices closer to $545-550/mt CFR under the current market conditions. The SteelOrbis daily reference price for ex-Russia billet has inched up by $5/mt to $515-520/mt FOB. However, another ex-Russia seller has managed to trade a 3,000 mt lot at as high as $570/mt CFR for immediate shipment which, according to market sources, does not quite reflect the current market reality.   

The business activity for ex-Iran square billet has been limited this week since the Iranian mills have been aiming to maintain prices and to even pull them up, while buyers are insisting on lower levels, considering the situation in consuming destinations. As a result, a 30,000 mt billet lot has been sold this week by one of the main exporters at $485/mt FOB for end-of-June shipment, versus $492/mt FOB fixed in the previous transaction. The cargo will most probably be directed to the GCC market due to the geographical proximity and relatively workable price. In fact, the domestic billet price in the UAE is at around $530/mt ex-works and so bids for ex-Iran billet are at $500-510/mt CFR. The freight from Iran to Jebel Ali is about $25/mt. In Asia, the latest ex-Iran billet prices have been reported at $510/mt CFR Thailand and the estimated freight for 20,000-30,000 mt is at $40-45/mt from Iran. In Turkey, the interest in ex-Iran billet is low and the buyers have preferred to book small lots from Russia and larger cargoes from Malaysia. The latest indications for Iranian billet in Turkey have been reported at $500-510/mt CPT for small truckloads.