Global View on Billet: Hopes for a rebound, but will it materialize?

This week has been relatively quiet in terms of price changes in the global billet market and trading has not been active either, except in a few markets in North Africa, Turkey and India. Though previously pessimism prevailed in most outlets, hopes for a gradual rebound have now emerged. However, market sources agree that, even if a rebound happens in the coming week, the trend will be short-lived without decent support from demand or scrap prices.  

Ex-Russia billet suppliers have switched their focus from the Turkish market to North Africa, Egypt in particular, where the acceptable prices have been better at a time when Turkish buyers have mainly retreated from imports after the decline in scrap prices. As a result of the recent sales to Egypt, the SteelOrbis reference price has increased from the previous level early this week by $7.5/mt and by just $2.5/mt since late last week to $470-490/mt FOB. The lower end of the range corresponds to the highest possible price in Turkey and the higher end reflects the latest deals to Egypt. A few deals for 20,000 mt each of ex-Russia billet have been rumoured at $488-490/mt FOB Novorossiysk with the freight being assessed at up to $35-40/mt. Market sources have confirmed that the CFR prices in Egypt, including some additional expenses, have been mainly at $530-540/mt CFR for November shipment. Moreover, for prompt shipment the price is not less than $550-560/mt CFR.

In Turkey, the softening of import scrap prices has impacted the interest of local buyers in import billet. As a result, suppliers, particularly those from Russia and Donbass, have pulled back their offers and concentrated on other markets like Egypt. The latest workable prices for the mentioned origins in Turkey have been evaluated at $500-510/mt CFR, while the latest small cargo for prompt shipment has been sold at $515/mt CFR Izmir region. While Russian sellers still mainly have issues with adjusting their trade in line with the new export tax and coping with Turkish buyers’ resistance, ex-Algeria billet has found acceptance in Turkey. According to sources, up to 50,000 mt of Algerian billet have been traded to Turkey at $515-520/mt CFR, while one large cargo is reported to have been sold at $508/mt CFR from an earlier-booked position. Duty-free billet origins are also on offer in Turkey, from Malaysia at $535/mt CFR and Europe at $550/mt CFR. Neither are currently considered workable in Turkey. In the domestic market, billet offers in Turkey have moved up to $550-560/mt ex-works Iskenderun, with several deals concluded at $549-550/mt ex-works, sources say. The latest billet offers in the Marmara region have been reported at $540/mt CPT, but before scrap prices declined.  

India has turned to billets imports over the past few weeks, given the stronger demand for rebar in the country. According to SteelOrbis’ market sources, the total tonnage of mainly Asian billet negotiated over the past two weeks is 150,000-155,000 mt, in talks to conclude at least four separate deals. However, though 100,000 mt have been finalized already, a number of negotiations are still ongoing, market sources said, to close all this tonnage or even more. The majority of the tonnage has changed hands at $520-530/mt CFR Mumbai port, and some market sources said that the lowest level of the import deal prices was $518/mt CFR. Up to 50,000 mt of the total import volume is heard to be ex-Indonesia, while the balance is ex-China or other origins. The deal price for the ex-Indonesia material was $522-530/mt CFR, according to different sources.  

This week has been very silent in the Asian import billet market due to the long Chinese holiday. And even though there are strong expectations that Asian billet suppliers will try to pull up prices after the holiday due to high raw material prices and the expected restocking in China, this is unlikely to work out and be successfully achieved in many deals in Southeast Asia. This week, offers have been reported mainly for ex-Iran materials, standing at $510-515/mt CFR in Indonesia and Thailand, with counterbids at $505/mt CFR at the highest. In the Philippines, offers have been rare and a few market sources believe they will still be at $515-520/mt CFR Manila after the holiday, but may increase to $520-525/mt CFR later in the week. Normally, after China’s holidays, there is a slight uptick in the market. Most FOB prices from Asia have remained at the same levels, with most suppliers waiting for China to come back.  

In Iran, billet export trade has been continuing at a gradual pace. Moreover, one of the main producers has managed to achieve a slight price increase in a recent deal. In particular, Esfahan Steel Company has traded 30,000 mt of billet to a trader at $477/mt FOB BIK, for shipment at the end of November. Previously, the same producer had sold a cargo at $473/mt FOB. In addition, Chadormalu Mining and Industrial Co. is currently holding a tender for 30,000 mt of billet. The company is accepting bids until October 9. Most market players assume that ex-Iran billet prices will fluctuate in a narrow range for now, despite buyers’ low price ideas. The key reason is the still limited export allocation, which may tighten further due to the expected issues with gas usage restrictions from the end of November on.