Global View on Billet: Price declines accelerate in Asia and continue in MENA, no bottom yet 

The downtrend has continued in the global billet market this week with the sharpest drop seen in the Asian market. Deals have still been limited as Turkish buyers have been waiting for a clearer downward movement in the next deep sea scrap deals, while Asian importers have been cautious in such a rapidly falling market. In general, further price declines are expected next week, though given the previous sharp drops, the space for prices to move down could be smaller.    

ASEAN mills have dropped their billet export prices sharply, by $35/mt since last week, following further declines seen in China, and they are trying to accelerate sales which have been very slow recently. The major Indonesian producer has cut its offers to as low as $565-570/mt FOB, down from $600-605/mt FOB last week. Moreover, some said that $560/mt FOB is also possible in negotiations. But even after such a sharp price drop, sales have remained limited. Market sources have reported a few trades at $585/mt CFR (around $565-570/mt FOB) for ex-Dexin 150 mm billet in the local market in Indonesia.

Ex-China official offers have dropped by $20/mt early in the week and by another $5/mt later, coming to $560-580/mt FOB. Chinese traders have been ready to provide discounts with a number of offers for 3SP 150 mm billet reported at $580-585/mt CFR in Southeast Asia. Chinese traders have become aggressive and have started to sell in short positions again as they believe prices still have room to fall further. One deal for ex-Dexin 150 mm billet has been done by a trader in a short position at $572/mt CFR Taiwan, the lowest level seen in the market lately.     

In the import market in the Philippines, only rare sales of low-priced IF billet have been reported, with most buyers leaving the market ahead of Easter. There was information in the market about a 10,000 mt sale of ex-Vietnam IF billet at $560-565/mt CFR Manila early this week and another trade for ex-Thai IF material at a similar price. Last week, a sale for IF billet was concluded at $575/mt CFR and most sources said that this was already extremely low. EAF/BF billet offers to the Philippines were at $590-600/mt CFR early this week and market sources said that buyers would target even lower levels of $580-585/mt CFR once they returned from the holidays.    

Ex-India billet prices have declined to $540-560/mt FOB, compared to $550-580/mt FOB as the reference level last week. The lower end of the range corresponds to the average bids, while the higher end represents what mills can agree on. And some in trade circles claimed that some low-volume tonnages have been under negotiations at a price as low as $530/mt FOB, but sellers were not willing to confirm such a “deep discounted deal” to avoid giving signals of any “panic selling in response to inventory pressures.”  

 In Turkey, billet import prices have decreased by $15/mt on the upper end over the past week to $580-605/mt CFR since business activity has been extremely weak. Buyers are aiming to see clearer import scrap pricing in order to understand the workable price for billet, and so hardly any negotiations have been reported this week. Given that the captive production cost of billet in Turkey is now estimated at $605-610/mt ex-works, the evaluated workable levels for imports are significantly lower than these levels. In addition, there is a serious expectation for deep sea scrap to fall to $420/mt CFR, which will mean import billet will have to be lower than $575-580/mt CFR. As a result, steel mills in Turkey prefer refraining from billet purchases this week, while also having their cargoes from previous bookings currently on the water. For now, only re-rollers may be interested in small-lot billet imports, especially those that have insufficient stocks. A 3,000 mt sale for ex-Donbass or Russian material has been reported at $580/mt CFR this week. Such a level may be accepted by some, especially given the limited allocation in the domestic market and the prices currently set at $630-660/mt ex-works.    

The SteelOrbis reference price for ex-Russia billet has slipped to $560-570/mt FOB, down $10-25/mt week on week. This decline is due to the lower tradable levels, as well as weakening offers.     

Turkish integrated steel producer Kardemir has lowered its local billet prices significantly. On April 5, Kardemir set its billet price at $630/mt for S235JR and $635/mt for B420 grade, both on ex-works basis. Although offer levels are around $20-25/mt lower than the general local market offers last week, the supplier managed to sell only a limited tonnage, around 15,000 mt. In the Iskenderun region, the market price is expected to be at $640-650/mt ex-works, while in the Izmir region the indicative offer level is estimated at $645-660/mt ex-works depending on the supplier.   

In the ex-Iran billet export market, a few billet tenders have been launched early this week for the regular 30,000 mt lots and with the due dates on April 7 and April 9. By the end of the week, according to sources, the sales have not been achieved by the producers, taking into account a considerable weakening of the workable price levels and some key consuming destinations. Particularly, the ASEAN and ex-China billet offers have dropped this week and the expectation for the Iranian billet in the region is at $570-575/mt CFR with $40-45/mt freight. In Turkey, where the import scrap prices are foreseen to fall in the short run, the offers for the alternative billet offers have fallen to $580-605/mt CFR this week, which means around $560-570/mt CFR is expected by the buyers to be available from Iran. As a result, the expected FOB price for ex-Iran billet is generally voiced at $535-540/mt FOB, some sources foresee even lower levels. In the meantime, the UAE destination is still considered as the attractive one for the traders for their position cargoes, but for the new lots the buyers are cautious for now. The SteelOrbis reference price has been set at $540/mt FOB for ex-Iran billet for this week.