Global View on Billet: Moods still firm, though prices in China lose part of earlier gains

Sentiments in the global billet market have been stable with positive bias, even though the Chinese market has lost a part of its gains seen last and early this week. It is expected that billet prices will stay firm in the coming week amid strong raw material prices.

The SteelOrbis reference price for ex-China billet settled at $440-450/mt FOB, $10/mt lower over the week. Soft PMI in July, weak local demand due to rains and hot weather and no concrete supportive measures announced by authorities have been among the reasons behind the rollback of prices. Coking coal futures also retreated after previous rapid rises. Nevertheless, Chinese billet prices have only partially lost its previous gains, which were $20/mt in total last week. Still rather strong raw material prices, coke and local coking coal in China, may prevent billet prices from seeing further declines. Trading has been weak in both local and export markets in China this week. 

The major Indonesian mill increased its billet offer by $4/mt early this week but then cut it again to $453/mt FOB, which is similar to the offer seen last Friday. Following active sales at $450-455/mt FOB for ex-Indonesia and ex-Vietnam billets, there have been no reports about new deals from ASEAN. Some negotiations have been held at $447-450/mt FOB late this week, signaling that the pressure of exporters persist, but they have mainly October shipment material available, so they are not in hurry to cut prices and sell. 

In the SE Asian import billet market, offers for 5SP billet have moved up to $470-477/mt CFR early this week, but they softened a bit by Thursday. Japanese 5SP 130 mm billet lot offered since late last week at $470/mt CFR Manila is still unsold, sources said, but “this can be good option for someone in need of 130 mm billet,” an international trader said. Some lower offers at $465/mt CFR have been seen in the Philippines for Chinese 5SP 150 mm billet. The lowest offers for 3SP billet in SE Asia have been at $460-465/mt CFR this week. But most market sources agree that bids are still not above $450-455/mt CFR for 3SP and $460/mt CFR as the highest for 5SP, making the trading almost halted. The reference price for import billet in SE Asia has settled at $450-470/mt CFR this week, up by $5/mt on average since last week.

In Turkey, while the import billet prices are mainly on the high side and are not quite workable, the buyers have been restocking in the domestic origin. In the Iskenderun region, particularly, over 20,000 mt have been booked at $510/mt ex-works with further rise in the offers to $515-520/mt ex-works. In the Izmir region, the prices are at $500-510/mt ex-works, pretty much in line with the export offers from the same region with the latest deal closed to Morocco at $500-505/mt FOB for 35,000 mt. In the Marmara region, the level of billet offers is at $505/mt ex-works.

Import segment of billet remains driven by China which has been indicating around $495-500/mt CFR and above for September shipments. Malaysian and Indonesian billets are assessed at $490-495/mt and $500-505/mt CFR, respectively. Overall, all Asian origins are not workable for Turkish buyers since the prices are in line or above the level of own billet production costs in Turkey. However, the uptrend is being used to increase the prices for long products in particular in the domestic market, where the rise has been partially accepted. Aside from Asia, Ukraine has been offering $500-510/mt CFR for September shipments to Turkey, while last week a medium-sized cargo was sold to Egypt at $485/mt CFR base while the current offers are at $505/mt CFR, SteelOrbis has learned.

Billet from Russia and Donbass is stable at $440-450/mt FOB Black Sea and the offers to Turkey are coming mainly at $460-470/mt CFR, in line with the past week’s levels. Although the level of $460-465/mt CFR should be workable in case of fast delivery and also versus high domestic and other import billet prices in Turkey, rare bids for Russian origin have been reported at $455/mt CFR, which is $430-435/mt FOB. One of the reasons is that the many regular buyers of Russian material restocked with Kardemir billet last week, SteelOrbis reported.

A few large Indian government mills have been able to push deals at $440-445/mt FOB, up from the previous tradable level at $435/mt FOB, indicating that buyers have been willing to accept the price rise seen in the previous week and that the market may have bottomed out in the current cycle prompted by sharp increases in input costs. An eastern India-based mill of a government steel producer reported a spot sale of 30,000 mt of prime concast billet for September shipment at $440/mt FOB, while another government-run mill concluded a sale for delivery to the Gulf of 20,000 mt of billet at $445/mt FOB. The sources said that some large private mills which had been absent from exports have begun submitting offers, some as high as $450/mt FOB, and, though deals have not yet been successful, there is a lot of optimism over demand for semis rebounding, provided prices in China are able to sustain the recent gains.