Global View on Billet: Egypt resumes active imports, but optimism curbed by huge supply

- Egypt has been the main focus of the global billet market this week as the local government has decided to cancel the earlier valid safeguard duties. Optimism has risen very fast after the reopening of this market as the news has been very positive in the current conditions of reduced demand almost everywhere globally. Nevertheless, the expectations of price increases have eased as rapidly as they emerged due to the huge volumes available from both mills and traders.

- Egypt’s import billet market has been reopened for international sellers after the cancelation of the 10 percent safeguard duties. The measure has also been levied for steel rebar and aluminium, and so market players are trying to assess the possible effects on both the semis and rebar segments and how the development might affect prices. Before the safeguard duty had been introduced, Egypt was a large import destination for billet, mainly from the CIS, but from Turkey too. According to the statistics, in 2018-2019 the average monthly import volume reached 150,000-190,000 mt. 

- A lot of negotiations have been held in the Egyptian billet market this week and prices have varied in a rather wide range of $650-690/mt CFR in deals. In total, not less than 150,000 mt, but according to some estimates up to 200,000 mt of imported billet from both mills and traders going short have been booked to Egypt this week. Earlier this week, the market was rather optimistic in terms of prices and the range of offers was very big - from $660/mt CFR to $710/mt CFR. 

- But by the end of the week, even though demand continued to be seen, the market has been more negative due to the huge supply volumes offered and sold earlier. The highest deal price has been reported at $690/mt CFR Egypt for ex-Ukraine billet during the week, but on Friday a number of market players considered that $670/mt CFR might be more realistic for upcoming deals. 

- As a result, the ex-CIS billet price has been fluctuating in the range of $630-640/mt FOB this week, just slightly higher than last week. The lower end of the range corresponds to the latest deal to Turkey and the tradable level late this week, while the higher end represents two deals to Egypt done by a major mill. 

- Import billet pricing in Turkey has not changed over the past week with bids to the CIS suppliers hardly exceeding $660-665/mt CFR for base grade and a small lot has been traded from Ukraine within this range. Bids for wire rod grade billet have been reported at $680-685/mt CFR with no transactions heard, partly as the sellers have been concentrating on negotiations with Egypt. Still, there are rumours about aggressive import deals for stressed cargoes in Turkey. One mill has reportedly booked at $648/mt CFR Iskenderun, while another is reported to have booked at $624/mt CFR Izmir, both for ex-India origin. In the meantime, workable local billet prices in Turkey have softened to $690-705/mt ex-works, mainly under pressure from the slow rebar business and the sharp drop in the value of the lira.

- As regards exports from Turkey, the indicative offer range has widened to $685-700/mt FOB, mainly as a result of the resumed talks with Egypt. Still, the Turkish mills are not in a rush to offer aggressively as they would need to provide sizeable discounts in order to be competitive with the offers for billet of other origins, which are mainly at $650-700/mt CFR depending on the seller. However, at least as compared to the CIS, Turkish mills have a freight advantage as the rate from the Iskenderun region is at around $25-28/mt versus $50/mt from the Black Sea.

- In Asia, the situation has been very depressed in the billet market. The highest possible level in the Chinese import market was $600/mt CFR, taking into account different levels in the provinces and the higher prices in Jiangsu. But even this level has been too low for any seller at the moment, and the main selling focus is still on Southeast Asia. 

- Though billet trading has been at low levels in Southeast Asia this week and prices from mills in the major market in the Philippines have remained relatively stable at $650-660/mt CFR, a bearish mood has continued to prevail. A number of deals for stressed cargoes from traders, who are in a hurry to sell redirected volumes from China, have been reported to Thailand and Indonesia at very low prices - at $618-620/mt CFR. Market sources believe that the market will remain under pressure until these cargoes for prompt shipment billet will be resold fully. 

- Seeing weak demand and prices in Asia, Iran-based producers of steel billet have been searching for alternative destinations, like Egypt. Traders having ex-Iran steel billet (earlier destined for shipment to China) are strongly seeking new customers with two cargoes for a total of 50,000 mt said to have already changed hands to Egypt at $655/mt CFR. With freight rate being estimated at $70/mt, the FOB price is in line with the current price ideas voiced by Iranian billet producers. 

- The main Indian billet exporting mill has closed a tender for 30,000 mt of 150 mm billet this week at $590/mt FOB, while another producer is heard to have also closed an auction at the slightly higher price of $600/mt FOB, but this could not be confirmed by the end of Friday. The final price has been higher than expected as the highest bid has been received from a trader targeting the MENA market, Egypt in particular. The large volumes of Indian cargoes, purchased for China, are still available in the global market, also curbing optimism.