Global View on Billet: Market seems to have hit bottom, activity improves

Following weeks of price declines and negative sentiments and some recent deals also reported at reduced levels this week, the mood in the global billet market has improved. This has not been reflected in prices this week, but in the coming two weeks some gradual rebound is expected by market sources.

The ex-China reference price has remained stable at $425-430/mt FOB so far, but, while early this week a few trades and negotiations at $422/mt FOB or even below were discussed, traders say that on Thursday and Friday no one would accept below $425-427/mt FOB. Chinese mills had started to lower crude steel production and discuss possible overhauls of some blast furnaces to maintain appropriate outputs. However, there are still a lot of uncertainties regarding whether demand will rebound further or not - this week an improvement in local consumption has been seen mainly for HRC and other flats products. Also, some announcements to support local consumption are awaited after the 4th Plenary Session of the 20th CPC Central Committee.

The Indonesian mill has closed its December order books for billet and slabs as well as wire rods. Its billets are offered for January at $435/mt FOB.

Low-priced sales of ex-China billet are reported to have been done late last week and early this week in Southeast Asia’s import market. A contract for over 10,000 mt of ex-China billet was signed at $438/mt CFR to the Philippines and a few market sources confirmed that the deal was in fact done, and for 5SP 150 mm billet. But by the end for the week, offers were mainly at $445/mt CFR, so almost stable to what was seen a week ago. There have been no new bookings in Thailand or Indonesia with some increase in offers for 3SP by $5/mt to $445/mt CFR.

Prices for ex-Russia billet have retreated after the very short rebound seen earlier this month. Increasing supply from Russia, some slight devaluation of the ruble from the previous levels and tough competition with China have contributed to the decline. Over the past ten days, Russian sellers have managed to sign deals for over 100,000 mt just to Turkey. The first contracts were signed at $455-460/mt CFR as was reported by SteelOrbis in the middle of last week. But the latest 50,000-60,000 mt of billets have changed hands at a slightly lower level - $453-458/mt CFR. This level translates to around $433-435/mt on FOB Black Sea basis. In addition, there has been a rumor that 20,000-30,000 mt of Russian billet have been traded to Egypt at $470/mt CFR, which translates to around $460/mt CFR, excluding extras for DWR grade. This price translates to around $430-435/mt FOB base grade but has not been confirmed by the time of publication.

Domestic billet prices in Turkey have remained at $510-515/mt ex-works depending on the region, but barely any transactions have been reported, mainly due to the weaker trend in the local rebar market. In particular, workable prices for rebar in Turkey have decreased to $540-550/mt ex-works levels, and so billet buyers are expecting the same $10-15/mt drop on the billet side.

Import offers from China have increased from $457-462/mt CFR to mainly $465/mt CFR for December shipments, with not much interest seen among Turkish buyers. The latest deal has been reported at $457/mt CFR Iskenderun region for 50,000 mt, with rumors of another 20,000 mt sale to the Izmir region at the same price level, but the information has not been confirmed by the time of publication. Ex-Indonesia billet is offered at $473/mt CFR, according to buyers, while no firm offers have been heard from Malaysia following the most recent sale at $488/mt CFR Iskenderun.

Ex-India billet offers have been dropped by a few sellers active in the market during the festival holidays in India, but the sellers have still failed to attract any buying in the face of competitive challenges, putting domestic mills under pressure in the global market, together with sliding trade prices in local sales. Sources said stray ex-India billet offers have been reported at $420-430/mt FOB compared to $430-440/mt FOB a week earlier, but no deals have been confirmed in the face of strong competitive challenges in key markets from Russia and China. Billet trade prices are down INR 300/mt ($3/mt) to INR 37,300/mt ($424/mt) ex-Mumbai.