Global View on Billet: Mood becomes bearish, no full-scale downtrend yet

- The situation in the global billet market has deteriorated further this week, while in addition to buyers’ resistance, the scrap segment has started to show signs of weakening. Certain decreases in prices have been seen in the Turkish import and Russian export markets, but, since the trend is still unclear in scrap, these are so far just considered to be a correction, not a full-scale downtrend. Also, in Asia, despite still difficult demand conditions, prices have posted slight gains.

- The local billet prices in Turkey have settled at $685-700/mt ex-works in the Marmara and the Iskenderun regions, and up to $720/mt ex-works in the Izmir area. Turkey’s domestic billet trade has been silent this week, affected by the change of mood in the import scrap segment and the decline in workable levels for import billet. In addition, the bullish mood in the rebar sector has cooled off somewhat, and, although the positive demand expectations are still there, market players are now sure the construction work in the earthquake zone will be handled within a longer period than the initially voiced three to four months. As a result, the rebar prices in Turkey have stabilized somewhat and mills have started to put pressure on both scrap and import billet. Another factor contributing to the bearish sentiment is the excessive number of import offers in both segments. The workable import billet price level in Turkey has settled at $625-640/mt CFR this week, mainly for Russian and several other origins for end of May-June deliveries. Particularly, several Turkish mills who restocked earlier report they will hardly pay above $625-630/mt CFR now and that they have to evaluate their export licenses carefully. As for billet with short lead times, Ukraine has traded 10,000-15,000 mt at slightly below $660/mt CFR. The same level is considered achievable for ex-Malaysia billet which is a duty-free origin and is offered at $10-15/mt higher. In addition, Indian offers have been estimated at around $650-655/mt CFR.

- The SteelOrbis reference price for ex-Russia billet has declined by $10/mt over the past week to $600-610/mt FOB. The indicative price level for ex-Russia billet from large suppliers has come down to $640/mt CFR Turkey by the end of the week, translating to $610-615/mt FOB. But bids have been scarce and below $630/mt CFR by Friday. Small sellers traded 2,000-3,000 mt lots this week at $633-634/mt CFR, down from $637/mt CFR last week, and bids have dropped to $625/mt CFR. Though last week $620/mt FOB Black Sea was still the tradable level for ex-Russia billet in the export market, with the uncertainties increasing in the scrap segment the new trades are expected at $600/mt FOB.

- Ex-India billet prices have increased over the past week and the deal price level has hit and exceeded $600/mt FOB. Nevertheless, a number of fresh bids from buyers have been reported at a lower level and sentiments in the major sales destinations have worsened, which signals that ex-India billet prices have reached a peak for now. An Indian state-owned producer has managed to close a tender for 30,000 mt of 150 mm billet at $600-605/mt FOB for April shipment. The price is $10/mt higher than last week’s tradable level of $590-595/mt FOB. The material sold in an auction to a trader is expected to be offered to the Turkish market, which, even though it has softened a bit, is still in better shape than Asian and Middle Eastern outlets. Despite higher price achieved in the recent tender, Indian private mills have been seen market price levels at $580-590/mt FOB and with a very limited number of bids.

- Ex-China billet prices first increased by $10/mt in the past week, while losing this gain by the end of the week, so the tradable price range has remained stable from last week, at $600-630/mt FOB. The leading Indonesian mill is still asking for $620-630/mt FOB depending on the grade. Similar prices could be found from Malaysia, according to sources. The leading ex-Indonesia mills and at least one ex-Vietnam EAF mill have closed a few trades at $630/mt FOB and these positions, according to some sources, are also for the Philippines but for future sales. Though the market developments in March in Asia have been mainly disappointing for sellers, expectations for April are still positive, though a lot will depend on the situation in China.

- Prices for imported billet in Southeast Asia have increased this week, with a number of deals for induction furnace (IF) materials signed at higher levels. Though overall resistance from customers has persisted and futures prices dropped in China on Thursday, impacting sentiments, the absence of cheaper options of billets in the Asian market and the need to replenish stocks after the previous slow weeks have resulted in price rises. Deals for ex-ASEAN 5SP 130 mm IF billets, mainly ex-Vietnam, have been done to the Philippines at $625-630/mt CFR since last week. This is up from the previous IF billet sales to Manila at $620-623/mt CFR, signaling a rise of up to $7-10/mt from the previous sales. Though the total volume of billet sold in the last round has not been confirmed by the time of publication, some sources have said that as much as 50,000 mt have been traded at the abovementioned range, though some market sources have been saying that the volume was smaller, at 20,000-30,000 mt. According to market sources, the current tradable level for 5SP EAF/BF billet in the Philippines is at $635/mt CFR, up from bids mainly reported at $620-625/mt CFR last week. At the same time, offers for such material from China and the ASEAN region have been reported at $640-655/mt CFR, with the lower end of this range corresponding to a Chinese trader’s position. Market sources do not exclude that bids will drop again to $620/mt CFR and below in Southeast Asia after the latest deals done.

- Iranian steel mill Esfahan Steel Company (ESCO) is reported to have floated an export tender for 30,000 mt of steel billet. The material is destined to be delivered in early May. The deadline for bids is Thursday, March 16, but the final result has yet to be seen, with some sources believing that the contract was at a similar price to the previous price. With a lot of offers from Asia seen in the market, it is quite likely that ex-Iran billet will go again to the Middle East. In the latest transaction late last week, the ex-Iran steel billet price settled at $572/mt FOB BIK. Besides, two cargoes of ex-Iran steel billet totaling 10,000 mt have been sold to a Turkish steel mill at $610/mt CFR.