Global View on Billet: Pessimism re-emerges everywhere, prices fall gradually

After a short-lived revival in sentiments last week, the mood in the global billet market has turned bearish again. The downtrend in China despite the expected restocking ahead of the long holiday has impacted the Asian market, while in Turkey limited steel sales and stable scrap prices have resulted in a decline in billet prices almost to the previous levels of two weeks ago.  

After the hike mills based in the ASEAN region attempted last week, their billet export offers have been corrected down slightly again, following the ongoing decreases in futures prices as well as in spot prices in China. Ex-Indonesia billet offers have come down to $510/mt FOB for 5SP billet, down by $5/mt over the past week, while for 3SP it is possible to get $505/mt FOB. Market sources are waiting for $500/mt FOB from the ASEAN region in the near future.  

The ex-China reference price has settled at $490-500/mt FOB, versus $500-510/mt FOB last week. At least one deal has been rumoured at the lower end of the range. Rebar futures at Shanghai Futures Exchange have fallen by 1.9 percent over the past week. Rebar futures prices moved down on three days this week, indicating a weakening of the mood in China as pre-holiday restocking has been slower than expected, while expectations for the post-holiday period are also not very positive. Average local billet prices have lost RMB 60/mt ($8/mt) over the past week.  

The gap between sanctioned Iranian and Russian billet and Asian origins has narrowed visibly over the past week in Southeast Asia, with the latter becoming more competitive. In the Philippines, offers for Asian origin 5SP billets have been mainly at $515-520/mt CFR, with the latest deals for ex-Russia and for Asian billets at $515/mt CFR and $515-517/mt CFR. For now, buyers’ price ideas have slipped to $510/mt CFR. A deal for ex-China 3SP billet has been rumored in Indonesia at $505-510/mt CFR this week. At the same time, sanctioned ex-Iran billet, of which prices are usually up to $10/mt below prices of non-sanctioned Asian materials, has been offered at $510-515/mt CFR to Indonesia and Thailand. The last sale for ex-Russia billet in Asia was done late last week to Taiwan at $505/mt CFR.

In Turkey, Kardemir increased its local 150 mm x 150 mm billet price by $7/mt since the previous round of sales to $532/mt and $542/mt ex-works depending on the steel grade. The producer succeeded in selling over 40,000 mt. Market sources assume that both Kardemir’s price and sales volume indicate the absence of panic in the Turkish market or a possible uptrend in the import segment, which was expected by some following Russia’s export tax announcement. However, in general local billet prices in Turkey have in general been corrected down slightly, with the $550/mt ex-works voiced by some mills last week no longer considered workable.  

While there are hardly many firm offers for ex-Russia and ex-Donbass billet in the Turkish market, players are estimating the workable prices at levels closer to the pre-export tax prices. The reference price for ex-Russia billet is down by $7.5/mt on average to $475-480/mt FOB.    

As for North African billet, there has been a trade for an ex-Algeria cargo to Turkey at $516/mt CFR for October shipments, versus $525-530/mt CFR offers last week. Traders who had taken positions earlier consider this level to be relatively low and are trying to get $520/mt CFR or above in Turkey and North Africa. Some Turkish mills believe the workable price for alternatives to Russia origin material should be at $515/mt CFR maximum. The most recent offers from Malaysia have been reported at $535/mt CFR.  

Iranian billet exports have been quiet this week, but a large Iranian steel producer has succeeded in closing an export tender for 30,000 mt of slabs at $472/mt FOB, for end-of-October shipment. The sale destination is expected to be Asia. This latest ex-Iran slab sale translates to $502-507/mt CFR Southeast Asia at the lowest, being much above the latest ex-Russia sale to China at $475-480/mt CFR. Market sources believe that the allocation of ex-Russia slabs has been limited after the introduction of the export tax at seven percent due to take effect from October 1.  

An Indian government-run mill held an export tender for 20,000 mt of 90 mm billet, with the highest bid received in the range of $495-498/mt FOB, lower than the mill had received for its previous lot of 150 mm billet at $513/mt FOB. The sources said that the low bid received was in line with the trend of falling ex-China prices and weak demand across Asia, and with buyers continuing to expect prices to fall further and hesitating to conclude deals. The poor response received by the government-run seller had an effect of contagion on the overall market, prompting private mills also to stay away from any spot sales.