Global View on Billet: Most markets still moving down, outlook also dim

The downward trend has continued in most major billet markets in Asia and the Middle East even despite some rises in steel futures prices in China and more talk about production cuts. The drop in scrap prices in Turkey, as well as declines in other raw material prices like coking coal and iron ore, have exerted pressure on the global billet market, which was already suffering from insufficient demand.  

Ex-Indonesia billet reference prices have come down by $5/mt over the past week to $495-500/mt FOB. While official offers are still at $500/mt FOB for 3SP, a number of large traders said that the real market price is already at $495/mt FOB, with a few deals for 20,000-30,000 mt heard at this level recently. Some market sources believe that, since the traded material was 3SP, it may go to India instead of Southeast Asia. Market sources said that $490/mt FOB is awaited in the near future from ASEAN region-based mills. Unofficial offers from Malaysia are also at $495/mt FOB, according to a number of sources.  

The only prices that posted some increase in the global market were ex-China 3SP billet prices, which added $10/mt on the lower end of the range, reaching $490-500/mt FOB, mainly due to higher futures prices and raw material costs early this week. However, since the current level is still among the lowest in the Asian market, sources do not assess this as representing a firm improvement. Moreover, local billet prices in China have settled at RMB 3,448/mt ex-warehouse on Friday, RMB 22/mt ($3/mt) lower over the week, reflecting the ongoing lack of strong sentiments, even though some large mills have announced maintenance works due to their negative margin.  

Chinese traders’ offers in Southeast Asia have remained at the same low levels seen last week, and are among the most competitive. The SteelOrbis reference price for imported 3SP and 5SP billet in Southeast Asia has settled at $505-510/mt CFR this week, versus $505-515/mt CFR last week. In the Philippines, the negotiable level for ex-Thailand IF billet has slipped to $495-498/mt CFR, while last week offers for this material were closer to $497-500/mt CFR. At the same time, a small-volume deal from a Chinese trader for 5SP BOF billet has been rumored at $510/mt CFR. In Thailand and Indonesia, the most competitive offers are still from Chinese traders, with Chinese origin 3SP billet at $505/mt CFR.  

There has been market chatter that one of the leading Russian mills in the country’s Far East region closed a deal for 30,000 mt of billets to Asia last week at a price below $500/mt CFR, below the price offered by Chinese or ASEAN-based suppliers. In particular, market sources in Thailand have said that early last week the abovementioned volume changed hands at $490/mt CFR, but it was for a mix of 100 mm and 150 mm billets and for prompt shipment. The deal was done by Chinese trader. As for the 150 mm billet offers from Russian mills for November-December shipment, the price is assessed at $505-510/mt CFR Taiwan, according to sources.   

In Turkey, integrated steelmaker Kardemir has traded close to 30,000 mt of billet at $520-525/mt ex-works this week, while the other billet producers in Turkey are offering at $530-540/mt ex-works. Small trades have been reported at the lower end of the range in the Iskenderun region, but overall buying has been rather silent. However, it is mostly believed that local billet will be in greater demand in the coming couple of weeks due to the ongoing uncertainty in the import segment. Offers for Asian billet, namely, from Indonesia, Malaysia and China, are at around $530-535/mt CFR which is too high for Turkish buyers.  

Rare billet offers from Russia and Donbas have been reported at $500/mt CFR Turkey, down $5/mt over the past week. However, there are no takers at this level, also due to the resumed downturn in the import scrap segment. Moreover, rebar and wire rod prices have softened both in the domestic and export markets, adding up to the overall negative market sentiment. Most negotiations for import billet are suspended in Turkey, but also the number of available cargoes is currently limited. Some Russian billet sellers prefer to hold back offers for the lots which were customs cleared before the export tax was applied. Some traders have difficulties in matching the workable market sales prices on CFR basis with the FOB levels, which they receive from Russian and Donbass mills for new position cargoes. The SteelOrbis daily reference price for ex-Black Sea billet has decreased by $5-10/mt over the past week and is now at $470-480/mt FOB, with the upper end of the range referring to offers to Egypt.    

Ex-Iran square billet trade has been quiet this week while a few export tenders have been reported. According to sources, Khorasan Steel Complex has floated a tender for 25,000 mt of billet to be delivered at the end of December and with validity until October 25. In addition, Khouzestan Steel Company has extended its tender for 20,000-50,000 mt of billet, which was previously due to be closed on October 19. According to sources, there has been a medium-sized billet sale from Iran at $478/mt FOB, but the information has not been confirmed by the time of publication. Currently, the workable billet prices from Iran are estimated at $477-478/mt FOB, but sources believe there is potential for price levels to soften to $470-475/mt FOB in the near future.

Ex-India billet trade activity has remained in the doldrums as sellers have not been submitting any offers since pessimism deepened after a government mill failed to successfully close an export tender. Trade sources said that the highest bid received ranged at around $450-470/mt FOB, even lower than the most pessimistic forecast of $480/mt FOB and the seller’s target at above $500/mt FOB. In the local market, billet trade prices have slumped INR 950/mt ($11/mt) to INR 42,250/mt ($508/mt) ex-Raipur in the central region. In this situation, the interest in imported billet in India has also eased, with the tradable level close to $500-510/mt CFR, versus previous deals at $520-530/mt CFR.