Global View on Billet: Mood still bearish with demand insufficient in Asia and MENA

- The global billet market has continued to soften this week with the mood in the scrap segment still bearish and demand in the major outlets of Asia and the MENA region being far from good. Most market sources believe that prices have not hit the bottom yet even though some better expectations for construction steel demand exist for April. 

- Import billet prices in the Southeast Asian market have declined further this week with Chinese traders still being the most aggressive and with even some extremely low IF prices emerging this week. The SteelOrbis reference price for imported billet in Southeast Asia has settled at $595-605/mt CFR by the end of the week, down by $15/mt from last week. A number of market sources have confirmed that offers for 5SP billet from Chinese traders for ex-China and ex-Indonesia billets have been voiced in the Philippines at $600-610/mt CFR. Moreover, some traders have been ready to accept bids at $595/mt CFR, though there has been no confirmation of any deal done at this level. There has also been a rumor of a sale of ex-Thailand IF billet to the Philippines at $575/mt CFR, which has been assessed as being too low even for the current market conditions.

- Some suppliers have started to offer to Vietnam since last week, trying to find bids at $610-615/mt CFR, but no deals have been heard so far. The duties for imported billet were standing at 11.3 percent and for bar and wire rod were at 6.4 percent, until March 22, 2023. Since the local capacities in the country are enough, even lower import billet prices could not lead to a continuous revival of demand for overseas semis. ASEAN-based mills’ offers have remained stable from last week at $600-605/mt FOB for 150 mm billet, though sources said that for 130 mm material producers can provide the same level. But taking into account soft demand and bearish sentiments, there was almost no interest in negotiations. Ex-China billet prices have been at $590-600/mt FOB, stable since late last week, though discounts are possible.

- Ex-India billet prices have weakened amid low business activity in the Gulf, Asian buyers retreating expecting declines to gain momentum, and lower-than-expected bids received by a government-run mill, leading to an overall negative outlook prompting private mills to pull out of the market. Ex-India tradable billet prices have been reported at $550-580/mt FOB with the midpoint at $565/mt FOB, sharply down from $580/mt FOB a week ago. The lower end of the range corresponds to rare bids, while the higher end represents the level that mills would accept in previous deals, but private mills were heard to be retreating from the market and not following up even the limited enquiries received. But the most negative impact on sentiments was rendered by reports of an export tender of 30,000 mt held by a government-run mill, which has not been closed as it has received very low bids at below $550/mt FOB, significantly lower than the internal reserve price of the seller.

- Turkey’s billet market has witnessed a significant price downturn this week, which has been triggered by lower scrap deal prices and the expectations of mills’ lower production costs due to the announced decline in energy tariffs. Longs demand has remained limited and prices have also weakened. In this situation, some billet sellers, particularly those selling Donbass origin, have become aggressive in their offers this week. While the previous deals were closed at $605-610/mt CFR, this week ex-Donbass billet has been available at $580-595/mt CFR, while the same price was also valid for ex-BMZ material. Such low levels seen in the market have more or less blocked the attempts of Russian suppliers to sell at $620-625/mt CFR. The workable level is now estimated by buyers at a maximum of $590-600/mt CFR. Another reason for the lower bids is that the current cost of captive billet production is evaluated at around $610-620/mt ex-works, and so there is no point for mills to pay such a level for imports. However, re-rollers may accept some offers at $605-610/mt CFR, sources believe. In the domestic market in Turkey, billet offers have declined to $650-660/mt ex-works offers, down around $20/mt over the past week.

Ex-Iran billet export trade has been stalled this week, mainly because the country is still on its holiday period which started on March 21. In the meantime, the global billet market sentiment has weakened considerably, and so the workable prices for Iranian billet have also decreased. According to market sources, the mills would easily take a chance to sell at $550/mt FOB, while suppliers are expected to push for at least $10/mt lower than that level. Generally, international traders prefer to wait before starting serious negotiations with Iran, since they believe the downturn in the billet market will continue for now and sooner or later Iran will be under pressure to sell.