Global View on Billet: Mood becomes positive again during first week of year

Prices in the global billet market have improved during the first week of the year, supported by high raw material prices and some improvements in sentiments even though demand in general has been limited. The outlook is still mainly optimistic, but only cautiously so.  

The uptrend in the Asian billet market has continued after the short New Year holiday and ASEAN mills hope for continued gradual increases since, together with high iron ore prices, there are expectations for a positive month of January amid stock replenishments in China. The new official offer prices for ex-Indonesia 3SP billet have been reported at $535-540/mt CFR, increasing by $5/mt from last week, while Malaysian offers from one mill have been at $530-535/mt FOB. About 20,000 mt of ex-Indonesia billet have been sold at $530-532/mt FOB to a trader for a long position.   

Chinese futures prices were on the rise early this week amid the positive outlook, while they declined later in the week as the profitability of mills has been under pressure lately. The reference price for ex-China 3SP billet has been at $540-550/mt FOB this week, while the average local billet price level is only up RMB 10/mt ($1.4/mt) over the past week.  

New offers for 5SP billet in the Philippines were reported at $545-550/mt CFR early in the week, while on Thursday some sources indicated that the minimum offers for ex-ASEAN BF billet had increased to $552-553/mt CFR, up $7-8/mt from last week. There have been minimal cheaper options in Southeast Asia with absence of IF offers and the latest offers from Russia reported only for Taiwan at $530-535/mt CFR.  

Iranian billet producers are finding it hard to increase the workable prices. Negotiations with Turkish and GCC region-based buyers are underway, though it seems that buyers’ and sellers’ price ideas do not match. One of the Iranian mills has lately closed a tender for 30,000 mt of billet at $487/mt FOB for a cargo to be ready at the end of January. Previously, one of the main Iranian producers had closed a sale at $490/mt FOB, but for 1SP grade, which has an extra. In addition, a third Iranian producer has had a tender for 30,000 mt of 3SP/5SP square billet, aiming to sell at $490/mt FOB, but has failed to get the price from customers.  

Import scrap prices in Turkey have not fallen drastically, as had been expected before the holiday, and so the mood of panic in the Turkish billet market has vanished. The number of billet indications from Russia and Donbass is scarce, mainly due to the holiday period. A small cargo from Russia for prompt delivery has been on offer at $550/mt CFR to the Izmir region, while previous deals for the same origin had been reportedly closed at $546-547/mt CFR for a total of 10,000 mt around two weeks back. In addition, around the same period, a small lot of Russian billet was sold at $535/mt CFR Karabuk region, while a large sanctioned Russian mill, according to sources, had traded 20,000 mt at $522/mt CFR. The tradable level for non-toxic Russian and Donbass billet has been at $545-550/mt CFR, while offers from Asia are at $570/mt CFR.  

Major Indian billet exporter RINL will target $530/mt FOB or so in its new tender for 30,000 mt of 150 mm billet, versus previous targets of $520-530/mt FOB, though the previous tender failed to be closed. However, except for this RINL tender, the Indian billet export market has remained inactive due to the holidays and the unclear local market trend. Some market sources reported low offers of IF billets from India, but market sources believe this is speculative.  

* - deal prices