Global View on Billet: Market sluggish except for emerging demand in Europe due to high energy costs

- The conditions in the global billet market have still been unfavorable this week, which led to declines in export prices from such large exporters like Russia and Iran after their increase attempts last week failed to gain traction without demand support. However, emerging billet demand from Europe due to the closure of a number of mills after energy cost hikes have been positive for a number of sellers from Asia and Turkey. As a result, this week the price trends in the different markets have been in opposite directions.

- ASEAN region-based billet producers have been targeting sales to distant markets, seeing slow demand in their regional market and the decline in supply observed in Europe and Turkey due to sharp increases in energy costs. An aggregate sale of 30,000 mt of billet by the main BOF-based producer in Indonesia to Europe was done at around $515-520/mt FOB. The sales destinations are Germany and Poland. Also, another deal for at least 20,000 mt of ex-Indonesia billet was signed to Spain. Another sales destination for ex-ASEAN suppliers is Africa, where negotiations at $520/mt FOB or slightly above have been taking place. Customers from Latin America have been out of the market so far. Also, 50,000 mt of ex-Indonesia billet were offered to Turkey at $590/mt CFR, which translates also to close to $520/mt FOB. Some sources said that a deal was done, but that the volume was limited, around 10,000mt or so. After the abovementioned sales, offers from Indonesia have increased to $530/mt FOB at the lowest, while offers for ex-Malaysia billets are still at $520/mt FOB as traders still have allocations for October shipment. 

- Turkish mills have begun billet exports, supported by the demand coming from the EU and are competing there with Asian suppliers. The steel production cuts, already announced and expected in the EU due to the energy crisis and increased costs, have naturally urged producers to seek external semis sources in order to keep up the balanced longs supply to the market. Indonesia has offered around 100,000 mt to the market and up to 70,000-80,000 mt were sold in the past week to Germany, Poland, Spain and Africa from this country, while the deal prices to Europe were at around $600-630/mt CFR. The most recent offers have been reported at $645-650/mt CFR, specifically in the Italian market.

The increased demand for billet in Europe has also supported Turkish mills, which were offering a minimum $650/mt CFR EU starting from the end of last week. According to sources, a recent 10,000 mt billet deal was closed to Italy at $672/mt CFR or around $625/mt FOB. The closer location and shorter lead time are the advantages of Turkey while ex-Indonesia billets will be seen in the EU only by December. 

- At the same time, steel billet suppliers to the Turkish market, particularly those from Russia, have found themselves once again under pressure, following a short period of higher indicative offers. The scrap price decrease in Turkey, though anticipated by many, turned out to be a quicker and sharper one as per the most recent deals, thus bringing the general market mood and expectations downwards. As a result, bids for import billet have declined and some buyers managed to fix deals at a discounted price. Some 2,000-3,000 mt lots were sold at $565-575/mt CFR. Some sellers evaluated such levels as low for early this week, but by the end of the week bids have slipped further and $565/mt CFR would be the highest possible level. Contrary to the information about the low-priced deals, sales of 3,000 mt lots have also been reported at $590/mt CFR, done by traders. After reaching $590-600/mt CFR late last week, the reference import price range has come down to $565-580/mt CFR Turkey on Friday, September 9. At the higher end of the range, there are offers for ex-Asia billets mostly. 

- SteelOrbis’ reference price for ex-Russia billet has been lowered to $520-530/mt FOB Black Sea, down by $20/mt from the previous $540-550/mt FOB. Suppliers, who had been pushing offers to the high level seen from last Friday, have been forced to cut prices to more reasonable levels, seeing negative movements in the scrap segment and demand, especially from Turkey, which is not as good as had been expected.

- Following a long-lasting pause, a new import billet deal has been reported to the Philippines at prices slightly higher compared to the levels seen in late August. But the overall demand situation has remained poor and fundamentals have not improved much. The deal for 25,000 mt of ex-Indonesia billet was done to the Philippines last week with the price for modified 5SP billet at $548/mt CFR (standard 5SP price is assessed at $542/mt CFR). Some traders said that 3SP billet has also been included in this deal and the price was $537-538/mt CFR. The freight from Indonesia to Manila has been assessed at $25/mt or just slightly above. On Friday, a rumour about another deal to Manila at $550/mt CFR has been heard, but this could not be confirmed by the time of publication. 

- Though ASEAN region-based mills have been trying to push import billet prices in the region after signing deals to Europe, Africa and Turkey, in the Asian region demand has remained limited. Apart from one deal with the Philippines reported earlier this week, other Southeast Asian countries - Indonesia and Thailand in particular - have not been ready for any price increase, while some customers have even been voicing lower bids. The latest deal for ex-Iran billet was done by a trader to Thailand at $505/mt CFR last week, at $5-10/mt below the previous contract for a sizable tonnage reported for ex-Iran billet last week to Indonesia. Some sources said that the lower price is due to the close lead time, though this was not confirmed by the time of publication. Offers for ex-Iran billet to both countries have been heard in a wide range of $510-530/mt CFR depending on the trader and the country, but no fresh deals have been done, with bids at $500/mt CFR at best. 

- An Iranian steel mill, Chadormalu Mining and Industrial Company, is reported to have cancelled an export tender for 30,000 mt of steel billet, which was floated in late August, due to lower bids. The highest bid has been voiced at $450/mt FOB, which was considered by a producer to be unworkable. But weaker bids are reflecting lower export prices, which were at $460-465/mt FOB last week. Some market sources assess tradable levels as even being at $440/mt FOB. 

- Prices for local billet in China have declined even further early this week due to slack demand and negative factors which have dampened the outlook for the near future. Even if they have posted some impartments by the end of the week, this has not been enough for any increase in demand for imported billet. The tradable level for imported billet has settled at $480/mt CFR, stable from last Friday. 

- In early September, ex-Iran square billet offers to the GCC have been reported at $510-520/mt CFR, down from $530/mt CFR indicated by traders in the second half of August. Recently, a 9,000 mt billet cargo of Iranian origin has been booked to the UAE at $515/mt CPT for material available at port. Another UAE-based buyer received $510/mt CPT for the same product. In such a situation, ex-Oman offers have also softened by $20/mt over the past two weeks to $530-540/mt CPT UAE depending on the steel grade. 

* - 2 weeks’ change