Global View on Billet: Gradual price rises emerge, but sustainability questionable

A cautious uptrend has been seen in the most major billet outlets this week, driven by better sentiments in Asia. But the price rises have been seen mainly in offers, while buyers see the market as stable, not willing to accept an increase.

The long-awaited uptrend has finally arrived in the Chinese steel market in late October instead of usual gains seen starting from early September or even in August. But despite the recent production cuts in Hebei and supporting measures by the government as well as the easing tensions between China and the US, the sustainability of the trend is questionable mainly due to still insufficient demand and high inventories. The SteelOrbis reference price for ex-China billet is settled at $430-435/mt FOB by the end of the week, up by $5/mt over the week, but slightly less than $430-440/mt FOB seen in the middle of this week.

Indonesian billet producer announced its offers for January shipment billet at $443/mt FOB as of October 30, up from $435/mt FOB last week.

Rising Chinese and ASEAN prices have not been accepted in major trade destinations. In Southeast Asian import market, most buyers have been ignoring higher levels as they have already booked at previous lower levels, and they are looking for cheaper alternatives like Iran or Russia. The latest offers for Chinese 5SP billet have been coming at $455/mt CFR Manila, but importers still want $435-445 CFR. There has been a rumor that Iranian 3SP billet has changed hands at $443/mt CFR in SE Asia, while ex-China offers for this grade are at $447-455/mt CFR.

In Turkey, the domestic billet prices have, as expected, slid by around $5/mt to $500-505/mt ex-works depending on the region, being under pressure of slow rebar trade. Some of the suppliers are still targeting $510/mt ex-works but it seems more of a hard target to achieve as of today. According to sources, around 20,000 mt of billet have been traded in the Iskenderun region at slightly below $505/mt ex-works, while buyers’ most recent targets are mainly below $500/mt ex-works across Turkey.

Import offers for billet from China are mainly at $475/mt CFR for December shipments, while some sellers reported $470/mt CFR levels as well. Still, the trade has been mainly slow as the buyers seem to be not ready to pay anything above $460/mt CFR. Ex-Malaysia billet offers have been reported at $495/mt CFR for January shipments. The indications for ex-Indonesia billet are at $475-477/mt CFR for January shipments. As a result, the buyers’ interest in ex-Asia billet is currently rather low, especially taking into account the active restocking from the Black Sea region, seen in the past couple of weeks.

Major Russian billet exporters have become inactive after active sales, mainly to Turkey, over the past two weeks, and their prices are expected to be stable or slightly move up with lack of support from buyers in the near future. Russian mills have managed to sell up to 200,000 mt in the second half of October, mainly to Turkey, but also some volumes to North Africa. But no new bookings have been reported after that. Latest offers to Turkey for rather small volumes have been heard at $458/mt CFR, translating to $438/mt FOB or so. Some market sources reported targets at not below $460/mt CFR, but this is based mainly on completed order books rather than an improvement in Turkey.

Ex-India billet prices were maintained after cuts earlier and relatively more sellers were heard to be active in submitting offers, anticipating market to have bottomed out and expectations of revival of buying, yet no confirmed deals were reported. Sources said that ex-India billet offers were kept stable at $420-430/mt FOB.