Global View on Billet: Positive sentiments persist amid stronger China

The global billet market has posted a further improvement for the second week in a row, triggered by better sentiments in China this week. While last week some market sources believed that prices could roll back soon, this week the confidence in stable or slightly higher prices for the coming weeks increased.

The ex-China billet reference price increased by $5/mt this week, to $430-435/mt FOB, with most offers at the higher end of the range. Some traders have even voiced $440/mt FOB. But the tradable level is still below $430/mt FOB as the market sources are waiting for new supply reforms to provide some long-term support to the trend. According to the government announcements since early this month, China will implement another supply reform in the steel industry with one-off shutdowns of non-efficient mills expected. This may provide significant support for the expected 50 million mt drop in steel production rumored as possible in 2025. Earlier this amount of 50 million mt had been assessed as too big and not realistic, with more market sources expecting a reduction not above 20 million mt, but if the reform starts the steel output cuts may be higher. Also, a military parade will be held in Beijing on September 3, which has led to most factories in northern China receiving notices of production restrictions. Meanwhile, there is news that the SCO summit [State Council meeting of the Shanghai Cooperation Organization (SCO)] will be held in mid-to-late September, during which time logistics and shipping at Tianjin Port will be affected.

While demand from Asian end-users is minimum and Turkish buyers are looking for closer shipment dates, there has been a rumor about a sizable trade at an equivalent to around $423-425/mt FOB for the GCC market.

Another problem has emerged for buyers with rising freight rates. This is connected with the start of the grain season, but also after the latest attacks on vessels in Red Sea, including those carrying steel billets, the rates for the Asia-Middle East route may increase more. One trader said that at the moment the freight for a large volume from China to Turkey will be above $35/mt. “With the rise in offers, freight also went up, so there is no sense [for Chinese seller] to drop the FOB price, it will mean nothing for the buyer,” a trader said. 

The Indonesian mill has increased its billet offers for October shipment to $440/mt FOB, also up by $5/mt from late last week. This increase is fully based on the Chinese rise, market sources believe, as the last deals were signed mainly at $422-425/mt FOB over a week ago.

In Southeast Asia’s import billet market, offers for Asian 3SP billets have been reported at $450/mt CFR to Thailand and Indonesia, while the last deal for this grade was done a week ago to Thailand at $440/mt CFR, and market sources said that with the current offers most buyers have withdrawn. As for 5SP offers, they have been heard at $450-455/mt CFR in the Philippines, though some traders have been ready to negotiate if there is a firm bid for a decent volume at $445/mt CFR.

Local billet trade in Turkey has been slow under pressure from the weak rebar market and low pricing. The billet offers have slid slightly from the upper end of the range over the past week to $485-500/mt ex-works, but the workable level is considered to be at $480-495/mt ex-works depending on the region and the volume. Sources expect deals to be closed only for small volumes and by those aiming to book semis with short lead times, but overall the main obstacle is rebar priced at $525-535/mt ex-works at the lowest and even at these levels sales are not so strong.

Import offers from China have increased from $460-465/mt CFR to $465-469/mt CFR for end-of-August and September shipments. At the end of the week, talk has emerged about deals at $460/mt CFR and slightly higher, but the information has not been confirmed by the time of publication. A Malaysian cargo for end-of-August shipment has been offered at $480-485/mt CFR, while a 20,000-25,000 mt stressed cargo of the same origin has been priced at $490/mt CFR and above. Ukraine is also in the market, with one mill offering a realistic level of $490/mt CFR, while another one is at a much higher level of $520/mt CFR. Market players expect Ukraine to take advantage of Turkey’s demand for billet with close delivery periods, in view of the Yemeni attacks on vessels in the Red Sea, which caused the loss of a steel billet cargo destined to be delivered to Turkey.

Ex-Russia and ex-Donbass billet may also be considered by Turkish buyers at a slightly higher price than earlier if buyers aim to avoid the risks of long delivery terms. However, since not all mills in Turkey can deal with sanctioned Russian material, the missing billet cargo from China will most probably be covered either from Ukraine or the domestic market. The SteelOrbis reference price from Russia has now settled at $435-440/mt FOB, up $2.5/mt over the past week on average. In Turkey, the offers are at $455/mt CFR and slightly above, with no fresh deals reported just yet.

Two large Odisha-based mills were heard to have submitted offers in the range of $425-430/mt FOB, taking their cue from successful small-volume deals breaking prolonged silent trade conditions and reports of improvements in ex-China prices. The current price is up by $5-10/mt from two weeks ago. An eastern India-based mill has reported a sale of 30,000 mt of prime billet at $427/mt FOB, instilling some optimism among a section of market participants, seeing it as a precursor of revived trade activity, while a larger section claimed it to be “premature and exaggerated” as the mood is expected to worsen.