Global View on Billet: Outlook rather firm despite softening in China

Though billet prices in the Asian market have posted declines this week, reflecting the softening in China, overall sentiments in the global billet market have been firm and prices are not expected to go down further. Moreover, some gradual increase is possible later in November.

The ex-China billet reference price for Chinese 3SP billet has settled at $420-425/mt FOB late this week, down by as much as $10/mt compared to last Friday. This happened due to slow demand in the local Chinese market and the poor outlook for the near future, reflected in the slide in futures prices on Monday to Wednesday. But as futures have rebounded on Thursday and Friday, traders have been less eager to sell at low prices and market sources believe offers will be close to $430/mt FOB next week. The possible gradual price rebound in China may be supported by higher raw material prices - coke prices have risen and may move up further next week, while iron ore is likely to fluctuate near $105/mt CFR. Also, steel production is going to decline with the first signs of this already seen.

Southeast Asian billet importers have started to show more interest in negotiations. The SteelOrbis reference price for import billet in Southeast Asia has declined by $7/mt on the lower end and by $5/mt on the higher end over the past week to $440-450/mt CFR. Most offers for Chinese 5SP billets have been at $445-450/mt CFR in the Philippines this week, down by $5-10/mt over the past week. The previous lowest deal price was at $438/mt CFR in mid-October, but market sources believe that prices will not fall to such a low level any time soon. A deal for Chinese 3SP billet was done at $447/mt CFR in Thailand early this week, but, with an manganese extra of $2-3/mt, the base 3SP price is equivalent to $444-445/mt CFR in this deal.

Ex-Far East Russia billet offers have been at $440/mt CFR in Taiwan, slightly below the levels offered by China at $445-447/mt CFR, but buyers have still been insisting on $430-435/mt CFR at the highest.

In Turkey, domestic billet prices have been set at $500-510/mt ex-works with most activity seen in the Karabuk and Iskenderun regions. Integrated steel producer Kardemir has announced its S235JR billet price at $500/mt and B420 material at $510/mt ex-works, managing to sell over 75,000 mt within a short time. In the Iskenderun area, most deals have been closed at $503-505/mt ex-works for medium lots. In the Izmir region, billet prices are at $505-508/mt ex-works, while in the Marmara region the offers have stood at $510-520/mt CPT during the week.

In the import segment, Chinese billet prices stand at $460-465/mt CFR, down $10/mt over the past week. Still, considering these offers are for January deliveries at the earliest, Turkish buyers are aiming for $450-455/mt CFR and the upper end of the range may be workable for the Chinese suppliers. Indonesian and Malaysian billet offers are indicative at $407-475/mt and $490/mt CFR, respectively, at the end of the current week. Both are for January shipments. A Ukrainian mill is in the market with $490/mt CFR for January shipment as well, while the latest workable price for this origin at around 485/mt CFR for the same lead time.

The export activity of Russian billet sellers has slackened following the massive sales they closed in October, mainly to Turkey and Egypt. The SteelOrbis reference price for Russian billet has remained stable at $435-440/mt FOB. In Turkey, some small-volume negotiations have been handled at $455/mt CFR, in line with previous bookings. In Egypt, the latest import billet offers from Russian and Donbass-based suppliers have been reported at $475-477/mt CFR, while the latest workable levels for ready cargoes stood at $470-475/mt CFR for 10,000-15,000 mt lots. With the minimum tax, the current import prices in Egypt would be in the range of $573-575/mt CFR. According to local Egyptian steel market players, the domestic 5SP billet price from Ezz Steel now stands at EGP 31,000/mt or $575/mt ex-works, while its 3SP material is offered at EGP 30,000/mt or $556/mt ex-works according to the current exchange rate.

The tradable level for ex-India billet prices is unchanged at $420-430/mt FOB and some offers have been heard at $430-440/mt FOB. However, two tenders by government mills received lower-than-expected bids, casting doubts over immediate success in spot deals. Sources said that a government-run mill held a tender for 30,000 mt of billet, receiving a highest bid of $420/mt FOB, while another mill of the same company held a tender for 20,000 mt, receiving a highest bid of $425/mt FOB, with both prices lower than the targeted prices.