Global View on Billet: Hardly any change in prices, still lack of positive expectations

The global billet market has remained almost unchanged in the first week of September as, on the one hand, demand in general is still weak in the main sales destinations as buyers are waiting for lower prices to emerge soon, while, on the other hand, firm prices of raw materials, like iron ore and coking coal, together with no major change in ex-China prices, have prevented the market from recording any significant negative correction.

The ex-China billet reference price is at $430-440/mt FOB this week, down by $5/mt compared to late last week with most offers at $435/mt FOB. Basic conditions in China are stable since steel output and inventories are on the higher side, while better consumption is yet to be seen. Despite the production cuts announced in Tangshan for the period from August 16 to September 3, which were expected to result in a loss of 90,000 mt of steel production per day, in fact the output restrictions were less strict, sources said, and mills already started to increase production on September 3. This supported iron ore prices at above $100/mt CFR. 

As for trading activity to the main sales destinations, Chinese billets have been mainly traded to neighboring markets like Southeast Asia. In particular, a deal for 10,000 mt of Chinese 3SP billet was done to Thailand at $454/mt CFR late last week-early this week, while another booking was rumored at $455/mt CFR. This is in line with offers for this grade voiced last week in Southeast Asia. Offers for 150 mm 5SP billets in the Philippines were at $453/mt CFR on September 4, and were at $455/mt CFR early this week, while last week a contract for the same grade and size was reported at $455/mt CFR or just slightly above. The more popular 130 mm billet is priced at $458/mt CFR Manila. However, no new deals have been reported in the country this week as “the market has not come back buying,” a local trader said, adding that $450/mt CFR may be the tradable level for now. 

The leading Indonesian mill has been inactive with its official offers staying almost stable at $445/mt FOB on Monday and then at $447/mt FOB, as the seller is not very interested in pushing sales of billets for November shipment and is waiting for a clearer trend in China. However, market sources agree that, having a firm offer, the seller may give $440/mt FOB.

In Turkey, there has been demand for domestic billet this week, but at discounts. Integrated producer Kardemir announced S235JR offers at $492/mt ex-works and B420 material at $502/mt ex-works, up $8/mt. The mill managed to trade over 56,000 mt of billet and to successfully close sales. In the Izmir and the Iskenderun region, the offer levels are at $500-505/mt ex-works, with small deals reported. However, the buyers mainly are aiming to book at below $500/mt ex-works.

Turkey’s billet importers are still refraining from dealing for ex-Asia material, which is currently offered for October-November shipments. The ex-China offers have slid from $480/mt CFR to $470-477/mt CFR, versus still rare bids at $460/mt CFR. The buyers’ price ideas are not quite acceptable to sellers, so no fresh deals have been reported. Indonesian and Malaysian billet is available at around $485-487/mt CFR and $490/mt CFR, respectively. One of the Ukrainian mills is in the market with $490/mt CFR, while bids are $5-10/mt lower. 

While hesitating to import from Asia, Turkish buyers, according to sources, have booked a total of 40,000-50,000 mt of billet from Russia and Donbass at $460-465/mt CFR. The price level has been maintained unchanged compared to the previous sales for the mentioned origins. There has also been talk about a $468/mt CFR Marmara sale, which has been denied by several market sources. The SteelOrbis ex-Russia daily reference price for billet has settled at $440/mt FOB, inching up by $0.5/mt on average over the past week.

Ex-India billet offer prices have been kept unchanged at $430-440/mt FOB after large mills lowered the price line in the earlier week, but, with buyers across the Asian region ruling out any immediate demand improvement, offers received a negligible response, leading to quiet market conditions. According to the sources, at least one large mill received a bid at $425/mt FOB, but it was considered too low by the seller, who was seeking a minimum of $435/mt FOB. The pace of the downturn in the local billet market eased with prices showing a mixed trend amid thin volume trades.