Global View on Billet: Market improves slightly amid rise in China and interest from GCC

More negotiations for Chinese billets have been heard in the global market this week, while some deals to Southeast Asia and the GCC have been done. Though overall demand lacks strength, a number of buyers have been more interested in purchases, seeing the uptrend in the Chinese local market and the lack of cheap options. The SteelOrbis reference price for ex-China billet has settled at $470-475/mt FOB, adding $7.5/mt since late last week. The main reasons for the uptrend are better local demand and restocking ahead of the Labor Day holiday in China, higher raw material prices (iron ore just slightly below $110/mt CFR for fines with 62% Fe) and the lack of big billet allocations for export. A large-volume deal for 40,000 mt of Chinese billet is rumoured to have been signed to Qatar, with the price estimated at $480/mt FOB, while sales for other destinations are closer to $470/mt FOB.

Rumors about possible restrictions on Chinese semis exports emerged on April 22, though most market sources agree that it is too early to evaluate the situation, while a meeting will be held with major Chinese mills this week. The market research department of the China Iron and Steel Association has invited several steelmakers, to take part in a video conference scheduled for Friday, April 24. CISA will hold the video conference in order to assess the effectiveness of the steel export license implementation, understand the difficulties encountered by enterprises in their export operations, and solicit comments and suggestions on further optimizing relevant measures, as reported by local sources.

News about sizable sales of Indonesian billets has emerged in the middle of the week and the seller’s side confirmed that in total around 100,000 mt of billet were traded lately. Though there has been no information about the trade destinations for these volumes and a visible part of them is said to be taken by traders in positions, market sources believe that growing interest for semis from the GCC countries could be a supportive factor. Deals for June and July shipment billets in three lots of more have been heard as done at around $480-485/mt FOB, according to market sources. New offer by Dexin Steel is for August shipment billets at $485/mt FOB, which is down by $5/mt from the level seen late last week.

In SE Asia, a sale of ex-China 5SP billet was heard at $497-498/mt CFR Manila earlier this week (improving from the previous tradable level at $485-490/mt CFR last week). But new offers for 5SP billet to the Philippines have already increased to $500-505/mt CFR. Prices rose amid the change in freight rates, not just on FOB basis, as well as stronger fundamentals with support from the cost side and billet availability was not so plentiful because mills are turning to slabs and HRC. The lowest offer for Chinese 3SP in Southeast Asia has been heard in Thailand at $495/mt CFR this week. Indonesian mill offered 3SP billet to the local market at $505/mt CFR for July shipment earlier this week.

In Turkey, considering the again rising local rebar prices, most billet suppliers in the domestic market have refrained from the discounts and maintained $550-560/mt ex-works levels, but no deals have been reported. The highest offers for rebar have not been fixed in deals, which makes the billet buyers hesitant to accept the current levels for semis as well. Kardemir, however, decreased its S235JR price by $5/mt to $535/mt ex-works while keeping B420 offer stable at $550/mt ex-works and managed to sell around 60,000 mt of billet. Import offers from China have mainly settled at $520-530/mt CFR throughout the week, with a deal at $515/mt CFR Izmir region for 25,000 mt rumored around. Ex-Malaysia billet offer has not been firm aside from the rumors about a sale to the Iskenderun region at $525-530/mt CFR for June shipment. Ex-Ukraine billet price indicative has been reported at $540/mt CFR, but the supplier prefers to concentrate on the European destination. 

Turkey has expectedly revealed the demand for ex-Russia and ex-Donbass billet lots. Small tonnages of 125 mm material have been sold at $502-503/mt CFR for May shipments. Most offers nowadays are there for June at $505-510/mt CFR with a rumor circulating around about a deal at $505/mt CFR or slightly above closed by a large mill. The SteelOrbis reference price for ex-Russia billet has been settled at $470-480/mt FOB Black Sea with the midpoint at $475/mt FOB, increasing by $5/mt over the week.

In the GCC, according to sources, there is an increased demand for many steel products under the impact of the ongoing war actions in the region and the consequent problems with the own steel production. Market players reported that the inquiries for wire rod, HRC, slabs have intensified recently from the GCC states, but above all the customers have been looking for billet as the region is generally longs oriented in terms of production. The indicative offers are at $530-535/mt CFR from China and Indonesia and, according to sources at least two cargoes have been booked within the range by buyers from Qatar and the UAE. Considering the logistics issues in the region, the delivered price to these customers is evaluated at $580-585/mt CPT with the route through Oman. Sources reported there are no domestic billet offers in the UAE and Oman, taking into account the problems with the HBI production amid lowering stocks of pellet feed and issues with the outside deliveries. In KSA, however, where the domestic market leader has once again increased its local prices, the latest billet indication has been settled at SAR 2,100/mt or $560/mt CPT.

Ex-India billet prices have been maintained at $480-490/mt FOB, with bids coming in from some Asian markets, indicating some re-emergence of buying interest. But buyers have remained price-sensitive, with bids reported at lower levels of $460-470/mt FOB and failing to result in any successful deals. It was pointed out that, despite big declines seen in the domestic semis market, in tandem with the fall in finished steel prices, sellers have been unwilling and unable to adjust offers to push sales overseas, in the face of steadily rising production costs, particularly the high prices of energy.