Global View on Billet: Market enjoys the silence, only China keeps slowly going down

The global billet market has been silent this week due to religious holidays, which almost stopped activity in the MENA region. At the same time, the general sentiments have remained weak amid prices in the Chinese market have continued to go down, even though in a slower pace than last week.

More deals for ex-China billet have been disclosed since late last week. Following a deal for 30,000 mt of ex-China 5SP billet at $505/mt CFR Manila late last week, which translates to $480-485/mt FOB, another contract for SE Asia for at least 20,000 mt has been heard at $480/mt FOB. Also, at least two sources said that they heard 3SP billet sale at $475/mt FOB. In addition, there has been a rumor about Chinese trader’s sale of 50,000 mt of ex-China 150mm billet at $485/mt FOB for Turkey. This information couldn’t be confirmed from the buyers’ side due to the holidays in the country, and some market sources still claim that the price is too high for the Chinese origin and could be for ex-ASEAN billet. Market sources said that this FOB price should translate to $520-525/mt CFR, which is below the previous deals for ex-Asia origin at $528-532/mt CFR. Even though some traders and mills in China claim that they refuse to go further down and even trying to voice higher offers, most market sources agree that without big production cuts, the ex-China billet sales will be sustained for the near future with no hopes for local demand improvement. As a result, on Friday, ex-China reference price slipped by $5/mt to $475-485/mt FOB.

A deal for 50,000 mt of ex-Indonesia billet has been disclosed at $490/mt FOB as done this week for August shipment. The price is down by $5/mt from the previous level, held by the seller for over a week. According to a few sources, the lot was booked by the large steel mill. The tradable level for ex-ASEAN billet may go down slightly more and it is assessed at $485/mt FOB by market sources, based on the best traders’ bids at the moment. However, July shipment order books are full, sellers may not be active in pushing volumes and cutting prices at least for some time. In addition, ex-Vietnam BF 3SP 150 mm billet has been on offer at $490-492/mt FOB for August shipment, down from $495-500/mt FOB last week.

Although price changes in the SE Asian import billet market have been limited in general after the fall last week, more offers in line with last week have emerged in SE Asia, however buyers have been cautious, waiting for a settled trend. Offers for 5SP 150 mm billets have been at $510-515/mt CFR to the Philippines for different origins, while 3SP billet offers have been at $505-506/mt CFR. Last week the market was discussing mostly Chinese origin billet, which was the lowest in terms of prices – a deal for 5SP was at $505/mt CFR for 5SP. But this week, most offers for Chinese origin have been at $510/mt CFR, while more other origins have emerged like open origin – up to $514/mt CFR (including ASEAN), also, ex-Korea EAF/BF offers have been at $511-515/mt CFR. Also, ex-Asia IF billet offers for 5SP have been reported at $508-510/mt CFR Manila with the counter bids at $500-505/mt CFR.

In Iran, no tender deals for square billet on exports have been heard this week, partly due to the religious holiday, but also due to quiet demand on the key purchasing destinations. As a result, the weekly reference price for ex-Iran prime billet has remained at $475-482/mt FOB according to the deals, closed in mid-June. However, there has been some demand for IF billet from Iran. Around 10,000 mt have been sold to the GCC at $440/mt FOB, while 5,000 mt have been traded to East Africa at $432/mt FOB, SteelOrbis has learned. In addition, a deal for 20,000 mt at $520/mt CFR to India might be also concluded shortly. It is worth mentioning, that some of the market sources believe that Iran might be less active on exports in the coming weeks unless the demand improves. The issue is the applied electricity surcharges during the high summer season in Iran, which affect mills' profits negatively.

Prices for ex-Russia billet have not changed much this week mainly due to the absence of Turkish buyers for the holidays. However, as the exchange rate of ruble against dollar has come to below 85 mark this week, making exports less attractive, some exporters have been holding back, hoping to push prices slightly up in the near future. However, most market sources do not believe that it is possible in the current market conditions and stabilization could be the best possible option. The SteelOrbis reference price for ex-Russia billet has remained at $498-500/mt FOB Black Sea, unmoved over the week, while offers have been rarely heard at near $505/mt FOB. The latest deals and tradable level for ex-Russia billet to Turkey have been at $515-520/mt CFR from early June. Also, the export duty is changing, based on the exchange rate. So, for a long time, when the ruble rate was 90 and slightly higher up to 95, the export duty was 5.5 percent, while now it slipped to 4.5 percent (for exchange rates 85-90).

Officially Indian mills kept offers for billets stable at $500-510/mt FOB, but the tradable levels and some deals (including IF billet) slipped to only $480-490/mt FOB. According to sources, market conditions improved in terms of volumes offered from India, but the buying conditions were difficult as buyers were interested in committing deals only at discounts and had multiple sourcing choices with more number of suppliers active in submitting offers. But with domestic prices of semis in India slumping in tandem with weak rebar price and fall in trade volumes of billets, both private and government mills were seen to be increasing in exports to ease inventory pressures.

*- latest deal price