Global View on Billet: Mood in China slightly better, major buyers focus on cheap sources

Though there have been cautiously positive signals coming from China this week, general sentiments in the global billet market have failed to improve much and the majority of market sources see the trend as rather stable in the current conditions of weak demand.

The downtrend in the Chinese billet market has come to a halt amid high production costs and negative margins of some mills. Also, more production cuts have been announced by mills. The reference price for ex-China billet has settled at $460-465/mt FOB, up by $2.5/mt on average from $455-465/mt FOB late last week. While some transactions were under discussion at $455/mt FOB last week, all major suppliers have since withdrawn such levels. Offers are currently at $465/mt FOB or above.

Meanwhile, ex-Indonesia billet offers first declined by $5/mt to $460/mt FOB for September shipment and then rolled back to $465/mt FOB by the end of the week. Though no new deals have been reported for billets so far, similar price levels for ex-Indonesia and ex-China billet signal that the first is more eager to sell. The Indonesian mill has been more successful in pushing slabs and wire rod in the export market this week, so it may push billets next week, sources believe.

One of the main news events in the global billet market this week was that a Turkish-owned vessel, carrying Indian billet, partially sank in the Strait of Hormuz near the Iranian port of Bandar Abbas. It was heading for Jebel Ali, United Arab Emirates (UAE), with a cargo of steel billets (around 30,000/mt) loaded at Kandla port in India’s western state of Gujarat. As a result of the accident, there will be an urgent need in the UAE to cover this loss, and some market sources believe that for short lead times Iran is the only option. Some market sources assess the tradable price level for Iranian billet from ports at $440-450/mt CFR for shipment to the UAE.

Large Indian mills have returned to the billet export market, aggressively offering large volumes, but bids were reported to be still rather low, in view of trade diversion following the fresh renewal of conflict in the Middle East. The SteelOrbis reference price for ex-India billet is stable at $450-460/mt FOB, but this mainly reflects mills’ targets (the higher end is for large integrated mills, while the lower end shows the level from IF mills), while bids are already below these levels with buyers having multiple import options. However, the sources said that greater clarity on acceptable price levels would be available once bids emerge against offers aggregating estimated 150,000 mt by a government-run mill. It was pointed that, despite sellers pushing higher volumes for export sales, the largest government-run seller had internally set $450/mt FOB or below as the level at which tenders (for base grade) can be cancelled, which indicates cautious expectations.

In Turkey, domestic billet prices have settled at $530-540/mt ex-works in the Izmir and Iskenderun regions, while bids are hardly above $520-525/mt ex-works. Slow rebar sales remain the main issue although prices have stabilized at $565-585/mt ex-works. Import billet offer from China have been at $515/mt CFR, up slightly over the past week, but interest has been low due to the long lead time. The latest ex-Malaysia billet offer has been at $525/mt CFR, with no deals reported. The rare deals to Turkey were done for the cheapest sanctioned material. Ex-Iran billet offers are at $460-465/mt DAP and $465-470/mt CFR, for short lead times. Sources reported a 50,000-55,000 mt cargo had been recently discharged in the Iskenderun region.

Ex-Russia billet offers are mainly at $490/mt CFR with a medium cargo reportedly booked at $480-485/mt CFR. The deal has not been confirmed by the time of publication, but the level is considered realistic, equal to $460/mt FOB or slightly above. Interest in Russian billet may temporarily diminish in Turkey due to increased war-related risks to shipping operations in the Black Sea. As a result, these small orders may be directed to Iran for the time being.

In Southeast Asia’s import billet market, after the previous price decline, the trend has been paused, with low-priced offers from India fading away. Also, most customers have considered purchases from Iran to be too risky. Most offers for 5SP billet have been heard at $480-485/mt CFR Manila, with the main source being China. The previous deal for 5SP was at $477/mt CFR in the Philippines and most buyers are still bidding at $475/mt CFR at the highest. As for Iranian billets, some rare offers (for both 3SP and 5SP) are still heard at $470-480/mt CFR in Thailand and Indonesia.