Global View on Billet: Market fails to find common trend as China’s return not so positive, but scrap up

Sentiments in the global billet market have been mixed in early February. On one hand, an increase in scrap prices in the benchmark Turkish market has provided some support for billet prices in some countries. However, on the other hand, China’s return from its long holiday has not been as positive as had been anticipated, preventing any expansion of bullish sentiments.

The local Chinese steel market re-opened on February 5 on a weaker-than-expected note after its week-long holiday. Slow demand has prevailed in the market with many market players unlikely to come back to the market before the Lantern Festival holiday (February 12). Also, the US tariff issue has impacted the Chinese market. As regards billet exports, there has been a very limited number of offers. Some suppliers voiced offers for billet at $445-448/mt FOB early in the week and lowered some of them to $440/mt FOB and down to $436/mt FOB by the end of the week. But, in general, the price range has remained limited and in line with that seen before the holidays. The leading Indonesian mill has announced its price idea at $445/mt FOB, just slightly changed from $443/mt FOB in late January.

Asian buyers have not been interested in ex-China or ex-ASEAN billets as prices are still at high levels. Most offers for Asian 5SP billet in the Philippines and Indonesia have been at $464-470/mt CFR this week, while 3SP material is quoted at $460/mt CFR. At the same time, while Asian offers have been out of the range of buyers’ interest so far, there have been active offers for Iranian billets at $450/mt CFR in Thailand for EAF/BOF material, but no confirmed deals have been reported so far.

At the same time, Asian customers have been buying sanctioned Russian billets from Russia’s Far East ports, which have been quoted among the lowest in the region. Billet from Russia’s Far East region has been sold to Taiwan at $448/mt CFR this week and some tonnage changed hands a little earlier at $445/mt CFR, according to market sources. Before the Chinese New Year holiday, Russian suppliers had announced offers at $440-450/mt CFR to Taiwan, up from the previous deals at $435/mt CFR to this destination. So, by the end of this week, they have managed to achieve the targeted level. In addition, 20,000 mt of 3SP Russian billet were sold to Thailand at $445/mt CFR recently, up by $5/mt from the contract done to this destination in the second half of January.

Trading for ex-Black Sea billet from Russian suppliers has also revived in early February. Sellers have decided to provide small discounts on the initial offers announced at higher levels last week in order to be able to sell to Turkey, while Asian exporters are inactive. According to market sources, up to 47,000 mt of ex-Russia and ex-Donbass billets (both traded by Russian traders) have been sold in total to Turkey this week. Of this, a few cargoes of 3,000 mt each have been sold for Russian origin material at around $445-450/mt CFR, translating to $425-430/mt FOB. Also, a few cargoes for a total of 35,000 mt of billet from Donbass, the Ukrainian territory currently occupied by Russia, are heard to have been sold at $440/mt CFR. This is down by $5/mt from the previous targets at $445/mt CFR for ex-Donbass billets, but almost in line with the previous sales at $435-440/mt CFR done to Turkey in January. So, the Black Sea Russian reference price has come back to $420-430/mt FOB this week.

Turkish buyers have been slightly more eager to buy from Russia, having a lack of options at the moment and as scrap prices have inched up. Kardemir has been out of the local billet market this week, focusing on longs sales instead. So, the local billet prices have increased by $10/mt on average this week just indicatively, and the market expects a clearer picture next week. In addition, as some Chinese sellers have not yet returned from their holiday, most offers for Asian origins have just been indicative and not much below $470/mt CFR.

Iran’s billet export price levels are estimated at around $415-420/mt FOB from first-tier mills and around $5/mt lower from second-tier mills. However, no fresh tenders have been announced or closed this week, but Iranian prices are considered workable in several destinations. In particular, offers to Egypt are at $405/mt FOB and, according to sources, around 30,000 mt have been traded lately at the mentioned level. Similar prices have been offered to Jordan, versus $397/mt FOB in bids, while some bids from GCC-based buyers for 10,000 mt have been reported at $430/mt CFR or around $405-410/mt FOB depending on the port of destination. In Asia, sources have reported offers at $450/mt CFR to Thailand and at around $430/mt CFR to the Philippines.

The reference price for ex-India billet has remained stable at $440-460/mt FOB this week, with some producers holding even higher offers, not targeting export sales. Overall export prices from India are considered ‘notional’ as local mills were not even submitting discounted offers, unlike in some previous weeks. Pressure to sell overseas was limited as inventories of semis at large mills are “comfortable and manageable” despite the recent downturn in long products.