Global View on Billet: Mood improves, prices expected to rise further

Sentiments in the global billet market have improved this week and prices have been gradually moving up, supported by rises in scrap prices and the better mood in China. Prices still have space for further rises, though the uptrend can only be a slow one as some buyers still hesitate to accept any significant rise.

A sudden rebound in the Chinese steel market has happened late this week, mainly triggered by the rise in futures prices based on expectations of stronger demand in spring and talk of steel production cuts for this year. As a result, official FOB-based billet offers from China and the ASEAN region have increased, but traders are cautious and the latest sales and tradable levels in different import markets are still at lower levels as the market fundamentals have failed to change so far. The SteelOrbis reference price for ex-China billet has settled at $435-440/mt FOB on Friday, up by $2.5/mt on average from last week. The market is awaiting the release of official news regarding steel production reduction regulations for this year. If they are announced at the previous rumored level of 50 million mt, this will support prices from the supply side a lot. On March 13, the National Development and Reform Commission (NDRC) released a report on the implementation of the 2024 National Economic and Social Development Plan and the draft 2025 National Economic and Social Development Plan, claiming that steel production will be controlled, though there is still no concrete figure for reduction for 2025.

The Indonesian mill has hiked its official offers by $10/mt to $445/mt FOB for May shipment from an offer heard early this week. This happened partially owing to the rebound in China and as the mill itself has managed to sell some May shipment volumes already. A sale for 30,000 mt of ex-Indonesia billet has been heard at $440/mt FOB this week.

The price improvement in Asia happened only in the second half of the week, while negative sentiment was seen in China since last week. As a result, some buyers were interested in restocking. One deal for a sizable lot of 5SP 1,500 mm billet was done to the Philippines at $460/mt CFR Cebu, which is equivalent to around $450-452/mt CFR Manila. According to market sources, this was a trader’s deal in a short position. In addition, early this week a deal for 3SP 150 mm Chinese billet was done at $443/mt CFR in Indonesia, down from most offers at $455-460/mt CFR last week. A few importers in Indonesia and Thailand received offers for 3SP billet at $450/mt CFR on Monday and were pushing to below $445/mt CFR, but by Friday most offers to Southeast Asia have moved up to $450-460/mt CFR.

In Turkey, local steelmaker Kardemir has sold up to 65,000 mt of billet with a $15/mt price increase to $500/mt and $510/mt ex-works depending on the steel grade. The hike by the supplier has encouraged mills in other regions of the country to raise their offers from $520-525/mt to $530-535/mt ex-works, particularly in the Izmir and Iskenderun regions.

Import offers from China have settled at around $480/mt CFR Turkey and slightly higher by the end of the week, with rumours about some mill having accepted $470-475/mt CFR in a deal closed last week. In addition, Malaysia has traded a full cargo at $493/mt CFR to the northern part of Turkey with offers further heard at $495-500/mt CFR. Overall, taking into account that captive billet production costs are rising in Turkey along with climbing scrap prices, the current prices for billet are quite workable. The issue which is holding back active billet imports are the long lead times (June deliveries) and uncertainty regarding Turkish longs exports.

Ex-Russia and ex-Donbass billet suppliers have also been aiming to improve their price positions by $5/mt to $440-450/mt FOB, which translates to $470/mt CFR Turkey. Sources report availability is quite low and only small cargoes are on offer, which can in fact attract the attention of Turkish buyers. The previous deals were closed at $455-465/mt CFR, according to market sources, and levels far above that are not yet considered workable. In Egypt, according to market players, offers from Russia have been coming at $480-485/mt CFR, up 5-10/mt over the past two weeks.

Ex-India billet prices have continued to decline over the past week. An Odisha-based integrated mill has reported a trade for 20,000 mt at $420/mt FOB, while another large mill sold a tonnage of 25,000 mt to an undisclosed destination in the Middle East at $425/mt FOB. Also, a slowdown in the movement of semis in the local market has impacted exporters.