Global View on Billet: Market finds equilibrium with China, scrap and general costs stable

Prices for billets in most major outlets have been fluctuating in a limited range this week, with the market having found an equilibrium for now. Most major drivers like the situation in China, the scrap trend and general costs of mills are stable, with limited changes expected in the near future, while demand is also likely to be reduced in the generally slow month of August.

The SteelOrbis reference price for ex-China billet has posted a tiny increase of $2.5/mt on average to $440-455/mt FOB, versus $440-450/mt FOB last week. But trading has been limited as the focus of sellers is still on the local market and buyers are still bidding lower at $440-445/mt FOB at best, versus offers at not below $450/mt FOB. Sentiments were rather negative on Monday, but offers improved since Tuesday amid steel production cuts confirmed in China in late July and the rebound in coking coal futures amid more talk about mining limitations. Daily crude steel production in China was announced by the China Iron and Steel Association (CISA) at below 2 million mt in late July (July 21-31), indicating a sharp fall compared to the previous levels. The average daily production of CISA members totaled 1.982 million mt in late July, down 7.4 percent compared to mid-July. 

An Indonesian mill has announced its billet offer at $455/mt FOB, up slightly by $2/mt from the level seen early this week and late last week. The exporter has started to offer billet and slabs for November shipment this week, but this has been mainly connected with good sales of finished steel like longs and HRC, while demand for semis (especially at the current levels) has been poor. There is no pressure on ASEAN mills to lower prices as China’s prices are not that far off either.

A few small-volume deals have been done in Southeast Asia after these small discounts. In particular, 10,000 mt of Asian 5SP 150 mm billet were sold at $465/mt CFR Manila late last week. A few sources said that all offers were at $470/mt CFR and higher last week and this week sellers are still asking the same $470+/mt CFR. But deals may be done only after discounts, and even this level is not very attractive for most buyers. In Thailand and Indonesia, offers for 3SP billets have been at $460-465/mt CFR, but no deals have been reported for Asian origins as bids are $5-10/mt lower. $450/mt CFR is the price Thai buyers will pay, but it can be offered only for limited volumes of Iranian billets. 

Ex-Asia billet offers to Turkey have rolled back as the market has been settling following the recent price surge. The latest billet offers from China have been voiced at $485-490/mt CFR with slight discounts considered possible, but there are no takers for November deliveries. Ex-Malaysia and ex-Indonesia billet is evaluated at $495/mt and $490/mt CFR, again for a long delivery term.

As a result, local billet is still preferred by small and medium-sized customers in Turkey due to acceptable pricing and availability for short delivery. In the Iskenderun region, a total of 20,000 mt has been traded recently at $513/mt ex-works, up from around 10,000 mt at $510/mt ex-works sold last week. Additionally, there has been a rumor about a fresh sale at $525/mt ex-works, but most market players assume it is too high for the current market conditions. In the Izmir region, one of the mills is offering at $505-510/mt ex-works, while the offers from the Marmara regions are at $512-515/mt CFR Izmir.

Aside from local billet, ex-Black Sea material is also expected to be favored in Turkey, unless the downturn in Asia continues. The most recent prices from Ukraine have settled at $490/mt CFR, with bids around $10/mt lower, which is not acceptable by the supplier. The allocation from Ukraine is currently limited.

Russian and ex-Donbass material is currently priced at $440/mt FOB as per the SteelOrbis daily reference price, moving down $5/mt over the past week. The workable price level has been reported at $463-465/mt CFR and down to $460/mt CFR, fixed in small deals, owing to the advantage of the short delivery time. In Egypt, ex-Russia billet is offered at $480-485/mt CFR effective, with the latest deal closed at around $450/mt FOB, according to suppliers.

Business activity in Iran’s billet export market has remained subdued, taking into account the energy crisis, internal difficulties related to the geopolitical situation, and the overall caution of buyers in terms of working with Iran. Still, more offers have appeared in the market and there has been talk about some sales at higher levels than before. In fact, according to sources, several lots have been sold by one of the largest suppliers at $425/mt FOB, though market players believe the actual level should be a bit lower than that. Another large mill is reported to be looking to sell at $430/mt FOB. In addition, an IF billet cargo has been offered at $410/mt FOB from port. Currently, the workable price level for billet from Iran is assessed at $408-420/mt FOB depending on the supplier.

Ex-India billet prices have been kept stable during the past week, but moderate trade activity seen earlier has faded, attributed to buyers taking a pause, while sellers have been maintaining an optimistic outlook. Sources said that, while ex-India billet prices have been stable in the range of $440-450/mt FOB, despite the steady flow of enquiries, bids were not being translated into deals as in the previous week. Continued robust gains recorded in local billet trade prices have also supported exporting mills in holding the current ex-India price line and not to rush to adjust it in reaction to the temporary lull in buying.