Global View on Billet: Market lacks direction, deal prices only fluctuate marginally

- The situation in the global billet market has not changed significantly since last week, with the bearish mood returning to Asia, with China’s market fluctuating in a limited range and scrap prices in Turkey unchanged. Some suppliers have managed to push prices up slightly in deals, but in general the real market prices have remained almost stable and market sources are waiting for some clearer signals from the scrap segment or from China, as well as regarding the demand situation in the finished steel markets. In general, the mood has been closer to pessimism as opposed to the confident strong expectations usually seen in September amid the seasonal rebound. 

- Ex-Russia export billet prices have inched up slightly over the past week to $470-480/mt FOB (+$5/mt on the upper end of the range), particularly due to the occasional sales to Egypt. One of the suppliers has closed two 5,000 mt lots at $475/mt and $480/mt FOB Novorossiysk in addition to the earlier-traded 10,000 mt at $470/mt FOB, as SteelOrbis reported. In addition, there are some limited position cargos offered in the market, which had been purchased by the traders at around $470/mt FOB.

- In the meantime, in Turkey the price situation has remained the same and Russian billet in this market is evaluated at $470-475/mt FOB. Most suppliers are waiting for some market changes early next week. No fresh bookings have been confirmed this week, following $503/mt and $510/mt CFR in earlier-reported deals. Another 3,000-5,000 mt sale has been reported as done in the past week at $495/mt CFR, but it was denied by the supposed seller. The sellers of Russian and Donbass billet have been targeting $505-515/mt CFR in offers for October shipments for small lots, while the larger cargoes from Russia have reportedly been available at $520/mt CFR. In Turkey’s domestic market, the indicative billet prices have remained mainly at $530-535/mt ex-works depending on the region, while some suppliers are targeting $540-545/mt ex-works, with no sizeable sales registered.

- ASEAN-based billet suppliers have kept prices stable this week after the slight increase seen in the previous week as there has been no strong push from China. Oversupply is still the main problem in Asia. An Indonesian mill has kept its official export offers for 3SP/5SP billets at $500-505/mt FOB and no new deals have been reported after the previous offers at $495-497/mt FOB around 10 days ago. Malaysia’s unofficial offers are at $505/mt FOB, resulting in just a slight decline of $2.5/mt over the past week in the ex-ASEAN billet reference price.

- Offers for ex-China billets have lost $5/mt over the past week, coming to $495-505/mt FOB, with at least one deal at the lower end of the range reported this week. This reflects the mainly bearish sentiments in the market, though a number of positive developments have been seen this week in China. Credit data released on Monday in China were better than expected, indicating that an improvement is expected in the real estate market in China, while on Friday the PBOC cut the RRR by 0.25 percentage points, the second cut this year after its cut in July. Market sources expect a gradual revival in the real estate sector in China, which will support steel demand. Moreover, higher futures prices and the increase in iron ore and coking coal prices may prevent Chinese steel prices from recording any further declines, at least in the near future. However, a lot will depend of the demand-supply situation, which has not been so good so far in September. 

- Prices for imported billet in Southeast Asia have retreated again after just a brief increase seen last week. Slack demand and low bids together with high supply from Asia have been preventing any sustainable improvement. Offers for ex-ASEAN and ex-China 5SP billet to the Philippines have come down to $510-515/mt CFR Manila, while last week suppliers were targeting $520/mt CFR and higher. There has been information about IF billet sold at $500/mt CFR, but it has not been confirmed by the time of publication. Market sources said that bids for BOF billet have declined to $500/mt CFR, while for IF they are hardly above $490/mt CFR.

-  A fresh billet export sale has been fixed in Iran this week by one of the major mills and the supplier has been able to achieve a price higher than seen in the previous transactions from other suppliers. Particularly, there has been a sale of 30,000 mt of billet for end-of-October shipment at $473/mt FOB. The cargo is destined for Asian markets and, in fact, some sources assume it will be sold to Indonesia. The most recent deal to the destination has been reported at $503/mt CFR for Iranian origin and the freight is estimated at $25-30/mt. At the end of last week, the offers to Asia from Iran were voiced at up to $510/mt CFR, while the latest deal at the time had been reported to Thailand at $498/mt CFR.

- The recent silence in the ex-India billet export trade was broken by the results of an export tender by a government-run mill, with the highest bid being at a higher level than expected, but this has failed to improve the overall sentiment and expectations, prompting private mills to refrain from increasing export allocations. A government-run mill, which held an export tender for 30,000 mt of 150 mm billet on September 12, received a highest bid of $513/mt FOB, though there has been no information on whether the mill accepted it and what could be the probable destination of the material. On Friday, another tender for 20,000 mt but 90 mm billet was announced by the same supplier. Most bids have averaged at around $500-505/mt FOB from buyers, but this was considered low by private mills. Given the still positive sentiments in the Indian rebar market, mills will target $520/mt FOB in the export billet market in the next round.