Global View on Billet: Hope for better September fades away with unchanged prices and duty in Egypt

Second week of September has failed to bring optimism to the global billet market and prices in most major outlets have remained stable with limited trading. Stability in the world has been supported by no major changes in China, and only fluctuations in the raw materials with no settled positive or negative trend. In addition, provisional safeguard duty on imported billet imposed in Egypt has added pressure to the sentiments.

One of the major news in the billet market this week was the announcement that Egypt imposed a provisional safeguard duty on import billet of 16.2 percent, with a minimum specific duty of EGP 4,613 per mt. This will impact the supply from Russia and more competition possibly to be seen in the Turkish import market. Also, Chinese sellers, previously actively sending billets to Egypt, will have to adjust.

Local billet offers in Turkey have remained at $500-505/mt ex-works in most of the regions with small deals closed in the Iskenderun area at $500-502/mt ex-works. However, taking into account slow rebar sales with the workable levels standing at $530-545/mt ex-works, the interest in the offered billet price is not quite high. Still, owing to the still high billet offers from Asia, the domestic billet producers in Turkey still have some ground helping them to avoid discounts.

Import offers from China have settled at $473-475/mt CFR by the end of the week, slightly up from the previous levels due to higher futures. Most of the bids throughout the week were reported at $460-463/mt with a possibility of going up to $465/mt CFR. However, a deal has been reported for a full cargo at $470/mt CFR, which is considered a bit unnecessarily high as of today. If it is not manipulating market, the sources believe that the price might include some payment extras or the booking, if true, might be a strategy of the Turkish producer regarding the upcoming CBAM restrictions in the EU. Indicative offers from Indonesia are at $485-488/mt CFR levels for November shipments, being of no interest for Turkish buyers. No firm offers have been heard from Malaysia as well and the evaluated price for this origin is at $490/mt CFR for early November shipments.

Ex-Russia and ex-Donbass offers for billet to Turkey have remained at $460-465/mt CFR and up to $467/mt CFR for prompt cargoes, with the latest and lowest deals reported at $458/mt CFR to the Karabuk region of Turkey. The SteelOrbis reference price for ex-Russia billet is at $440/mt FOB Black Sea, stable over the week. In Egypt, the latest ex-Russia prices stood at $485/mt CFR and maybe slightly above. However, considering the recent imposition of 16.2 percent import tax for billet in Egypt, the incoming flow is expected to be temporarily disrupted and, if restored, to be in much smaller volumes.

There has still been no settled trend in the Asian export billet market in the past week, with Chinese sellers holding prices rather stable despite gains in iron ore early this week. The ex-China billet reference price has remained stable at $430-440/mt FOB. Most offers are at $435/mt FOB, and even some sellers have been ready to deal at $428-429/mt FOB, this has not resulted in increasing activity. Iron ore with 62 percent Fe content reached $106.55/mt CFR on Tuesday, the highest since late February. This happened after news that the Guinean government has asked Rio Tinto and Baowu to establish local processing plants for the Simandou iron ore project instead of the previously planned fully export-oriented iron ore plan. This will potentially postpone the start-up of the 120 million mt per annum project previously expected to start operations late this year. But by the end of the week, iron ore prices have come back to below $105/mt CFR due to slow demand and weak fundamentals. Though some local restocking is awaited ahead of National holiday in early October, it is unlikely to be large-scale, considering high steel inventories in the market at the moment.

The Indonesian mill has increased its offer for billet for November shipment to $450/mt FOB, from the previous levels of $445-447/mt FOB seen last week. Dexin Steel has been focusing on HRC sales to the region. Also, the producer managed to sign a few small-volume deals for slabs to Thailand and Indonesia at around $440-445/mt FOB. After that, it increased offers for slabs to $450/mt FOB and started to offer for December shipment.

In SE Asian import market, despite reports about higher offers for 150 mm 5SP billets from China to the Philippines at $460/mt CFR, by Thursday, most of them have returned to $452-455/mt CFR, almost the same as last week. Most buyers are waiting for $450/mt CFR for this size and grade. Late last week, one of the Russian mills sold a cargo of 26,000 mt of 125 mm billet at $432/mt FOB Far East ports of Russia, which translates to $455/mt on CFR basis or slightly above. Though overall supply of 130 mm billets is still limited, bids have been softening in line with the market mood. One of Indonesian buyers mentioned that since Wednesday, some traders have become more aggressive and can give below $450/mt CFR for Chinese 3SP, if there is a firm bid.

Ex-Iran billet is mainly offered at $410-420/mt FOB for October-November shipments from the producers’ side and at around $395-410/mt FOB by traders, including the indications for IF produced billets. The highest and most workable offers are there for the GCC buyers, at $460-465/mt CFR, while the offers from Oman are still at $490-500/mt CPT. Offers to Asia have been reported at $453-455/mt CFR with the freight estimated at around $31-35/mt.

Ex-India billet prices have been kept unchanged at $430-440/mt FOB, but even stray bids at around $425/mt FOB have been considered unviable by local mills. According to the sources, an export tender which closed on Tuesday, September 9, was heard to have received a highest bid of $415/mt FOB and most market participants claimed it was too low to be viable for any seller. Even though gains in local billet prices have been modest over the past week, the positive was that declines have been reversed with the tentative indication of a new uptrend emerging, and Indian mills focused on the local market.