Global View on Billet: Fall in scrap fails to put strong pressure on billet with China rather stable

This week, the global billet market has been rather inactive and there has been only a small decline in prices in some markets, though most of them have remained stable. Even the sharp fall in the scrap market has failed to put strong pressure on billet prices, which had been losing ground for weeks. Also, since the Chinese market has been fluctuating within a limited range, this has supported sentiments and has even led to some rise in offer prices, in Asia in particular.

The ex-China billet reference price has officially remained stable at $420-430/mt FOB since last Friday, but market sources said that most offers heard at $420-425/mt FOB early this week have increased to $425-430/mt FOB by Friday. Some sources said that there have been a few deals done by traders to Europe and the Middle East, but the details have remained unclear by the time of publication. Also, small volumes have been sold to Asia at $415-420/mt FOB, but this level is already not workable for most sellers by the end of the week. The tradable level for distant markets like Saudi Arabia and Turkey was at $455/mt CFR, but offers are already higher by the end of this week.

Deals for 130,000 mt of ex-Indonesia billet have this week been signed to traders at $424-425/mt FOB for June shipment, $1-2/mt below the offer level seen late last week. Subsequently, the mill increased offers to $427/mt FOB. At the moment, the Indonesian mill has only small volumes for June shipment still available for sale, while some said that only July shipment is available at the moment. Most volumes were for covering the short positions of traders because futures prices in China went up in the middle of the week. The easing of US-China tensions led to a 1.46 percent increase in rebar futures on Wednesday. Most positions of traders taken from the Indonesian mill this week will be to cover previous sales to the MENA region - Saudia Arabia or the UAE - and to Turkey.

In Southeast Asia’s import billet market, offers for 5SP billet have been heard at $452-460/mt CFR Manila with the lower end ($452-455/mt CFR) corresponding to 150 mm material, while the higher end is for the more popular 130 mm billets. But higher prices have failed to attract demand after a deal signed for ex-China 150 mm 5SP billet at $440/mt CFR around 10 days ago. Also, while earlier this week some offers from traders for ex-China 5SP billets were heard at $440/mt CFR, now most offers are at $445-450/mt CFR.

In Turkey, the collapse of import scrap prices has impacted the general market mood as expected in a negative way, with trade slowing down in the billet segment. Unlike the rebar market, where immediate discounts have resulted in sizeable sales locally, in the billet segment a significant decline in domestic prices has not yet triggered any significant market activity. Local billet prices depending on the region have settled this week at $490-507/mt ex-works, down from $500-520/mt ex-works a week earlier. Buyers’ bids, which are rare, are closer to $485/mt ex-works in some regions. Kardemir is expected to launch new billet sales next week, which may result in some market movement. In the import segment, Chinese and Indonesian billet offers have remained relatively stable at $455-460/mt CFR, while an ex-Malaysia position cargo has been on offer at $475/mt CFR, which is not considered workable. Overall, taking into account that scrap has settled for now at $312-325/mt CFR, the import workable price level for billet is considered to be at $445-455/mt CFR levels and maybe slightly lower, depending on origin.

The SteelOrbis reference price for ex-Russia billet has settled at $420-435/mt FOB with the midpoint at $427.5/mt FOB Black Sea, losing $7.5/mt on average since late last week. The lower end of the range represents bids for Russian billets from Turkish buyers, voiced at $440/mt CFR. But no firm negotiations have been reported. Until the ruble depreciates, Russia will not export billets, market sources believe.

Most Indian first-tier mills have remained out of the export market, while a few second-tier mills submitted offers, maintaining prices in the range of $420-435/mt FOB, but they agreed to lower them to around $415/mt FOB net of discount. Nevertheless, trade activity has remained almost silent. According to the sources, the large integrated mills were not looking at overseas sales, anticipating an increase in captive consumption and better local prices. With supplies of semis flowing out of large mills for merchant sales tightening as a result, billet trade prices in the major trading hub of Mumbai gained INR 400/mt ($5/mt) to INR 44,300/mt ($519/mt) ex-warehouse.

*- deal price