Global View on Billet: Market uneven with some negative bias in Asia, but scrap still rising

The global billet market has been very uneven this week with prices in Asia posting some slight declines after the Chinese government intervention in iron ore pricing, while the continued increase in scrap prices in Turkey has caused a number of billet suppliers to remain sceptical over the likelihood of any significant price declines in the short term.

ASEAN billet prices have been fluctuating quite a bit this week. Suppliers managed to sell very limited volumes at higher levels and were forced to cut offers on Thursday due to the worsening of the mood in China, but corrected them up slightly again on Friday. The highest-priced deal was done from Indonesia to Latin America at $520/mt FOB last week for a limited 10,000-20,000 mt, while most traders have been waiting to get prices below $510/mt FOB. On Friday, offers from Indonesia have settled at $520/mt FOB amid export sales of other products like wire rod and slab, as well as the rebound in steel futures prices in China.

Ex-China 3SP reference billet prices are at $525-535/mt FOB, up by $5/mt on the upper end of the range since late last week. But the current level is mainly indicative as most traders are not interested in selling Chinese material in the export market, with the focus on the local market and the strengthening of the Chinese currency against the US dollar.

Tradable import billet prices have declined in Southeast Asia this week, following some declines seen in the local market in China. The SteelOrbis reference price for imported billet in Southeast Asia has lost $8-10/mt over the past week to $520-525/mt CFR, which reflects the recent tradable level, with offers for 5SP EAF/BOF billet for Asian origin reported at $530-535/mt CFR Manila. The workable price for IF material is assessed at $510-515/mt CFR, down from the previous deal for Malaysian IF at $518/mt CFR. A deal for 26,000 mt of ex-Far East Russian billet has been rumoured at $520/mt CFR to the Philippines, but this information has been denied by the supposed seller. The price is $5/mt below the level targeted by Russian sellers last week.

The last deal for Russian billet to Taiwan was at $510/mt CFR, after which one of the major Russian mills increased offers to $515-520/mt CFR and the higher levels have not been accepted by buyers yet.

In the Turkish domestic market, billet prices have been mainly at $550-570/mt ex-works this week, up from $545-555/mt ex-works previously. Moreover, closer to the end of the week, the levels of offers are rather at the upper end of the price range, following the recent rise in import scrap prices. Some sources believe prices for billet are set to move up further and Kardemir is expected to announce its offer close to around $560/mt ex-works. In the import segment, pricing this week has been lacking consistency and has very much depended on the supplier and the origin. Malaysian billet has been on offer at $560/mt CFR, while Algeria has been offering at $10/mt lower, almost in line with the latest deals for position cargoes. Ukraine has also been aiming to sell at around $550-560/mt CFR for January shipments. 

However, prices from Russia and Donbass have been somewhat uneven this week. Following a deal by one of the mills to a trader at $510/mt FOB, some suppliers still assessed the market to be at around $505/mt FOB. However, given inquiries and the actual market reality, for now the SteelOrbis reference price for ex-Black Sea billet is at $495-505/mt FOB, with the midpoint at $500/mt FOB. According to sources, levels of $517-518/mt CFR Turkey were still available earlier this week, in line with the recent 20,000 mt sales to the Karabuk region. There has also been talk about small sales for Russian and Donbass material at $520-522/mt CFR and for Belarus material at $515/mt CFR. However, these were not fully confirmed by the time of publication.

Ex-Iran billet prices have been inching up and several deals have been concluded recently with the support of the rising scrap prices in Turkey and the overall positive market sentiment. According to sources, 30,000 mt of billet have changed hands at $470/mt FOB, while another deal for a similar volume has been done at $472/mt FOB. However, a third producer has closed a 25,000 mt billet sale at $467.5/mt FOB with the sales destination thought to be North Africa. Generally, offers to the GCC have remained relatively stable at $485-490/mt CFR Jebel Ali, while in Turkey the indications have been reported at $480/mt CPT Iskenderun. In Asian markets, traders have been trying to increase their prices from the previous deals at $505/mt CFR and are targeting $510-515/mt CFR, SteelOrbis has reported. In addition, there is once again talk about the imposition of two percent tax for billet exports, from the previously valid 0.5 percent.