Global View on Billet: Market slow and negative but not directly affected by tariff and tax turmoil

This week has been full of announcements which will have an impact on trade flows in the global steel and raw materials markets, such as the US reciprocal tariffs and the strict regulation of non-VAT trading from China. However, in the billet market such news had a limited impact and, in general, pressure on prices globally resumed due to slow demand and negative sentiments.

The leading Indonesian mill cut its semis export prices three times this week. Billet offers from Indonesia stand at $435/mt FOB for June shipment on Friday, down by $20/mt compared to last Friday. The slab price stands at $460/mt FOB, down $15/mt from last week. Indonesian billet prices were at relatively high levels over the past two weeks, so the latest price cuts signal that the mill is eager to accelerate sales. There have been reports that negotiations with a few Asian traders have been held at $433-435/mt FOB, but there has been no confirmation of deals so far. 

One of the reasons for ASEAN mills being more flexible has been the negative sentiment in China. Asian billet export prices have indicated little movement this week, with only a small decline in price seen early in the week. Since China has a short holiday late this week and demand in the local market has been lower than expected, futures prices have softened, impacting local billet prices. The SteelOrbis reference price for ex-China billet has settled at $430-445/mt FOB, with the midpoint at $437.5/mt FOB, slightly down by $5/mt on average since last Friday. A few traders have said that offers are mainly at $440-445/mt FOB from China, but there is a possibility that the tradable level may improve from the current $430-435/mt FOB amid news about new tax regulations on exports from China, which will impact non-VAT trading of wire rod and HRC, but not billet. 

The Trump Administration’s reciprocal tariff announcement this week had no direct impact on the billet market. But market sources are worried that it may put pressure on the economic growth of some Asian countries, like Vietnam as its tariff in the US is among the highest at 46 percent.

In Turkey, the billet market has been quiet this week due to the holiday period, while prices have overall remained in the same range as a week ago, but there have been shifts in the offer price levels depending on the origin. In particular, by the end of the week ex-Indonesia billet indications, which were at $485-488/mt CFR earlier, are now evaluated at $475/mt CFR and slightly below. Chinese material has overall remained at $480/mt CFR for end-of-May shipment, while for June shipment one can find billet at $475/mt CFR, traders say. Malaysia does not seem to be back yet in the market for June shipment. In the meantime, ex-Russia and ex-Donbass suppliers are targeting $475-480/mt CFR Turkey, up $5/mt over the past week, with the main reason being the local currency exchange rate in Russia. As a result, the ex-Russia daily reference price for billet has remained at $455-460/mt FOB. However, Turkey seems not quite ready for these price levels even for prompt shipment and is most probably waiting to evaluate Kardemir’s new billet offer price levels likely to be announced next week. The latest local billet prices in Turkey from other producers stood at $510-530/mt ex-works.

Prices for ex-India billet in the international market have declined over the past week due to still weak sentiments in China and the silence in the Middle East. So, in general, Indian mills have been focusing on their local market which is better both in terms of prices and volumes. The ex-India billet reference price has settled at $425-435/mt FOB with the midpoint at $430/mt FOB, moving down by $5/mt on average over the past week. Only one Odisha-based mill reported a sale of 30,000 mt at $433/mt FOB, the sources said. In view of long product prices showing a weak performance in China, there has been no appetite for higher-priced semis across the Asian region, while the Middle East market has remained quiet. This has prompted Indian prices to move down indicatively.