Global View on Billet: June started on negative note, though price cuts limited

The global billet market has remained weak, and June has brought more pessimism due to demand concerns. At the same time, price cuts have been rather small as prices have already fallen a lot, especially in Asia.

Early this week, prices for ex-China billet fell to $410-420/mt FOB and even talk about negotiations at $405/mt FOB emerged. This followed a slump in futures prices due to bearish news regarding steel demand in China and the expected tariffs hikes by the US. Even though later this week prices from China rebounded to $410-430/mt FOB with offers more at $420-430/mt FOB, overall sentiments have remained weak. And the rebound was related to futures increase and costs push, while fundamentals have failed to improve.

The major Indonesian mill announced its billet offers for September shipment at $425/mt FOB in the middle of the week, down by $3/mt from late last week, which is a response to the downtrend seen in China early this week. No new deals have been reported for ex-ASEAN billets this week.

Chinese billets have been the most competitive in Asia and the Middle East, making Russian billets less attractive. In particular, sales to Taiwan were done at $435/mt CFR for base grade 3SP billet and at $458/mt CFR for vanadium-added material. This confirms that Russia has lost its competitiveness to China as it offers to Taiwan have been at $445/mt CFR or just slightly below. In addition, a contract for 50,000 mt has been signed to Turkey at $452/mt CFR.

A few deals for Chinese origin billets have been signed in Southeast Asia’s import market since late last week, when prices came to their lowest level this year. On Thursday, some higher offers have been voiced by suppliers, following rises in futures prices in China on Wednesday, June 4, but market sources believe that low offers from some traders are still available due to negative sentiments. At least two deals for 150 mm 5SP Chinese billet have been done in the Philippines at $440/mt CFR Manila, which is slightly down from offers heard last week at $441-445/mt CFR for this grade. In addition, one of the Southeast Asian buyers has purchased 150 mm 3SP billets at $435/mt CFR, though some market sources believe that there have been a few bookings for 3SP at this level and up to 20,000-30,000 mt have been traded in total.

Local billet prices in Turkey have slid over the week from $500-515/mt ex-works to $495-508/mt ex-works, taking into account weaker scrap and limited business activity in rebar segment. In addition, the restocking before the holiday has been minimal therefore the pressure on the billet side has increased. In the Iskenderun region, the mills stood at $500-505/mt ex-works this week versus $508/mt ex-works small sales closed last week. In the Izmir region, around 15,000 mt were sold at $507-508/mt ex-works, down from the initial offers at $515/mt ex-works. Marmara region-bases mills, according to sources, have been offering $505-507/mt CFR to the Izmir region, which is around $495-500/mt ex-works.

Import offers from China have inched up to $458-460/mt CFR for August shipments with a deal reported at $452/mt CFR Izmir for 50,000 mt. Currently, the levels at $455/mt CFR are not suitable for the sellers, while Turkey’s price idea is at $450-452/mt CFR and below.

Ex-Russia billet suppliers remains limited for several weeks now due to unfavorable exchange rate, which is making sales less profitable for the major exporters. The latest workable price levels in Turkish market were fixed at $450-455/mt CFR to the Turkish Black Sea, which is translating to $430-435/mt FOB Black Sea. After the holiday, Turkish buyers are expected to seek around $445-447/mt CFR for Russian and Donbass billet, but the price trend is likely to depend on the further scrap market development and China’s price move.

Ex-India billet prices have “notionally” been kept unchanged at $415-425/mt FOB, but the bottom of the market has been knocked out by the Trump administration doubling steel tariffs to 50 percent, sources said. Bids heard at $400/mt FOB “may be unreasonable even in current market conditions, and the response of ex-India sellers too was not economically viable,” a source said.