Global View on Billet: Market stable with negative bias, lack of optimism for autumn so far

Prices for billets in most major outlets have remained rather stable during the past week, though the overall mood is still negative. Though usually suppliers try to push up prices ahead of the seasonal demand rebound in September, for now a positive outlook has still failed to emerge.

The ex-China billet reference price has settled at $435-445/mt FOB, stable compared to late last week. Prices increased a little early this week, but rolled back later, as demand remained limited and even production cuts ahead of the parade on September 3 have failed to help. Most firm offers were at $440-445/mt FOB, but market sources said that a few traders have decided to purchase at $430-435/mt FOB. Despite the production cuts announced in Tangshan up to September 3, in early August Chinese steel output increased, so at the moment steel inventories have been putting pressure on Chinese prices and preventing them from recording any rises ahead of the seasonal demand improvement. 

In Southeast Asia’s import billet market, a deal for 30,000 mt of ex-China 5SP billet is heard to have been closed at $455/mt CFR late last week. Some sources believe that the price was a little higher up to $457/mt CFR, but in any case it was below $460/mt CFR, while the previous booking to SteelAsia was done at $465/mt CFR around two weeks ago. As for Chinese 3SP, offers have been heard at $455/mt CFR, but a lower level at around $450/mt CFR is possible, with bids from Thailand at $445/mt CFR.

The leading Indonesian mill has been trying to adjust offers closer to the Chinese price level and has reduced its official billet offer for November shipment by $5/mt from late last week to $445/mt FOB. Still, this price and shipment period remain inconvenient for most traders and end-users, who will prefer Chinese material. As for ASEAN semis exports, there have been rumors of sales of slabs - from Indonesia to Europe at $440-445/mt FOB for 20,000 mt, in particular. Another deal for 60,000 mt of Vietnamese slabs has been heard at $460/mt FOB to ArcelorMittal, but this information could not be confirmed and some sources said that this level is rather high for the ArcelorMittal asset in Latin America.

Billet prices in the domestic market of Turkey have settled at $500-510/mt ex-works depending on the region with not much buying seen this week. The key reason is the weak demand for rebar and strong signs for longs prices to soften further now that import scrap prices have inched down in a couple of deals, following a long period of relative stability.

Import offers from China have been mainly concentrated at $480/mt CFR for October shipments, with a few sources believing down to $475/mt CFR should be reachable. Still, major Turkish buyers are not ready to book at above $460-463/mt CFR. According to market players, an ex-Malaysia cargo was booked last week to Turkey’s Iskenderun region at $485-490/mt CFR for September shipment and, although the information has not been fully confirmed, the price makes sense for a batch with a relatively short lead time. Indonesian billet remains of no interest in Turkey since it is for November shipment and the offer indication is evaluated at around $485/mt CFR. Ukraine has not been firmly in the market, assessing some alternative sales possibilities and higher price levels. In addition, according to some buyers, there have been offers of a position cargo from Algeria at $485/mt CFR.

The business activity for Russian billet is not so strong either, although the advantage of closer proximity compared to Asian cargoes still favors Russian sellers. According to sources, one of the mills succeeded in selling 25,000-30,000 mt of billet to Turkey at $462-463/mt CFR Izmir for end-of-September shipment, in line with the previous deals from the region at $460-463/mt CFR translating to around $440-443/mt FOB Black Sea. Some of the new targets are at $450/mt FOB from Russian mills and some Donbass-based suppliers, but the level is not considered workable. The SteelOrbis daily reference price stands at $437-442/mt FOB, stable week on week.

Over the past two weeks, the demand for ex-Iran billet improved with 5,000-20,000 mt lots traded in the range of $415-430/mt FOB, mainly for ready cargoes or for batches with a short lead time. Sources assume the trade is attributed to currently firm Asian billet offers and the fact that these lots are available mainly for October-November shipments. Still, at the moment, while Iranian mills are targeting something close to $430-440/mt FOB, traders report they are having troubles selling billet at $405-410/mt FOB. Currently, the GCC region, particularly the UAE, is the best chance for Iranian billet to be accepted at a higher price. The offers have increased by $10-20/mt over the past fortnight to $455-465/mt CFR and may even rise higher, taking into account that billet offers to the UAE from neighboring Oman and Qatar are at $475-500/mt CPT. In Asia, the latest offers for billet from Iran for 130 mm stood at $458/mt CFR, being unworkable against Chinese indications at $455-460/mt CFR.

Ex-India billet prices have been cut by large mills to the range of $430-440/mt FOB, compared to levels of $440-450/mt FOB in the previous few weeks. However, these offers were submitted along with additional discounts on the final invoice as sellers attempted to push volumes overseas. An Odisha-based mill reported a sale of 20,000 mt of prime concast billet at $420-430/mt FOB with the price net of discount closer to the lower end of the range, versus a formal offer heard to be around $435/mt FOB. Another mill reported a sale of 20,000 mt for the Middle East market at $425/mt FOB, net of discount.