Global View on Billet: No firm trend, prices in major outlets supported only by high production costs

There has been no definite trend in the global billet market over the past week and generally prices have stabilized. But the main support has been coming not from fundamental factors like demand or a lack of supply, but from the cost side. Though scrap prices have posted a small decline after the holidays, overall production costs and prices of other raw materials, like coking coal, have remained high.

Offers for ex-China billet inched up early this week and then rolled back. On the one hand, exporters felt the impact of cost pressure and the stronger yuan, but weakening local demand and the start of the weak season for business have exerted pressure. The SteelOrbis reference price for ex-China billet has settled stable at $470-475/mt FOB as higher offers at $480-485/mt FOB seen early in the week have failed to be sustained. Due to the coal mining accident in China, local coking coal prices have added $22/mt over the past week, while mills have accepted the fifth round of local coke price increases.

The major Indonesian producer has cut its billet offer by $5/mt to $485/mt FOB. And this level has been fixed in a deal for September shipment with a trader taking this position, targeting the GCC market. The new offer from the mill is for October shipment, though some traders report that September can be found. Market sources believe that Dexin has sold to the Middle East, but that is because they have the certifications needed.

As for Indian billet exports, the previous large tender for 60,000 mt of 150 mm billet was closed at a higher level than discussed last week, but lower than the mill’s target. The final price was confirmed at $475/mt FOB, which is above $460-470/mt FOB seen in number of bids, but lower than the target set by the mill at $480/mt FOB. The final destinations for these volumes will be Saudi Arabia and the UAE, market sources said. Another tender-based offer for 30,000 mt but for SAE billet was less successful, and there has been no confirmation of whether the producer agreed to sell at $10/mt below the targeted level. Despite some difficulties in sales abroad, the same seller has followed up floating another export tender of a similar volume of blooms, with sources claiming it to be an indication of aggressive liquidation of mounting inventories of semis not being absorbed in the local market. The SteelOrbis reference price for Indian billet has settled at $465-475/mt FOB, up slightly by $2.5/mt on average over the past week.

The billet market in Turkey has been quiet in the week after the recent holiday, mainly due to the rebar trade not living up to expectations. The domestic rebar trade has remained insufficient in terms of volumes and, moreover, seasonal impacts are expected to have an impact soon in some areas of the country. As a result, while rebar has settled roughly at around $590-605/mt ex-works in workable levels and $610-620/mt ex-works targets are unlikely to be achieved, interest in billet has remained low. Local billet prices have mainly settled at $560-565/mt ex-works in the Iskenderun region and at $570-575/mt FOB in the Izmir region, with no sizeable deals reported. On the import side, basically there has only been China with $525-530/mt CFR offers throughout the week, with the expected levels of bids at $515/mt CFR. Still, the potential volume of demand is limited even if that price level is achieved. Indonesia, Malaysia and Ukraine are currently out of the market.

Billet offers from Russia and Donbass have been reported at $510-515/mt CFR and up to $520/mt CFR in some cases. The latest deals have been reported at $510/mt CFR, which translates to around $485-486/mt FOB basis. To Egypt, the latest offers from Russia have stood at $490-495/mt FOB. Overall, the SteelOrbis reference price for ex-Russia billet has inched up by $2.5/mt over the past fortnight to $485-490/mt FOB Black Sea.

Billet offers in Southeast Asia have increased slightly this week, mainly because of higher offers seen from China since early this week. But customers have been staying away as they are waiting for the trend to settle first. Offers for 5SP 150 mm billet in the Philippines have been heard at $499-503/mt CFR, which is $1-4/mt higher than last week. Prices for 3SP billet available in Southeast Asia are starting from $495/mt CFR and up to $505/mt CFR. Russia has come back with offers to Taiwan at $495/mt CFR, which is in line with ex-China prices this week.