Global View on Billet: Price declines continue due to weak demand fundamentals

- Prices for billets in all major markets in Asia and MENA have continued to decline this week even though they have already been unreasonable for a number of sellers and despite increases in scrap prices in some regions. The major reason for the continuous downtrend is weak demand fundamentals and not so strong outlook for September as usual.

- Prices for import billet from Russia to Turkey have dropped this week even despite some slight increase in scrap and limited number of suppliers in the market. The pressure from the Turkish customers’ side has been strong enough to lead billet price to fall by $20/mt since last week, to slightly below $500/mt FOB Black Sea, while no other sales destinations have remained for Black Sea sellers. The reference price has been based on a few 5,000-6,000 mt billet sales closed by an ex-Russia producer at $530-540/mt CFR, though offers have been rare and higher.

-  Square billet market of Turkey has once again failed to see an increased number of offers. Basically only one Russian mill was there to offer, while other suppliers, including the ones for ex-Donbass origin, have been staying away from the market due to either non-matching costs and buyers’ bids or simply because they have no material for close shipments on hand. As a result, while the indicative offer level was estimated at $550-555/mt CFR and above, some small sales were closed at $530-540/mt CFR, according to the market information. Large mills were also said to be in the market to purchase, but their workable price is expected to be below $520/mt CFR. In the domestic market hardly any offer is available in the Izmir region, while in the Iskenderun region some indications have been voiced at around $600/mt ex-works. Integrated mill Kardemir announced $590-595/mt ex-works level and sold at least 8,500 mt of billet though the final tonnage is expected to be higher than that. 

- In Asia, price declines have been gradual this week - $5-10/mt. The tradable price levels for imported billet in China have fallen by $10/mt to below $500/mt CFR mark again, which has led to almost full halt of the trading activity. Foreign suppliers have been assessing the level, targeted by Chinese importers, as too low and economically unreasonable, so they have redirected their offer volumes to other destinations such as Taiwan and Southeast Asia.

- The Southeast Asian billet market has witnessed slight decline this week as weak demand and low bids have put pressure on suppliers and their attempts to increase prices have been rolled back. So the general offer level for EAF/BOF billets from ASEAN mainly from traders has slipped to $535/mt CFR Manila for 3SP and $545/mt CFR Manila for 5SP, down by $5/mt over the week depending on supplier. Ex-ASEAN mills have been asking still higher - $550-555/mt CFR, though no offers at $560/mt CFR or above have been reported this week. Ex-mills prices have been assessed as not workable and not reflecting the current market with its limited demand. Some traders have been ready to provide $530/mt CFR for 3SP billet in the Philippines, if they have a firm bid.

- Iran-based steel producer Sirjan Jahan Steel Complex (SJSCO) has floated a fresh export tender for the regular volume of billet which is 30,000 mt. The reference ex-Iran billet price has been lowered indicatively by $5/mt this week to $450-455/mt FOB, while there are certain doubts the levels will be widely accepted by the buyers. The price was earlier considered workable in the GCC region, where the offers for Iranian origin of billet were at up to $530/mt CFR. However, after the rebar price decline, announced by UAE’s Emirates Steel Industries on August 25, the workable billet price in the region is expected to be under pressure. Some of the sources expect $500/mt CFR from Iran, while some foresee $480/mt CFR. The freight within the region is estimated at around $30/mt.

- Indian producers are still considering export prices at below $500/mt FOB as not economically efficient, taking into account that the local tags in India are at higher levels. At least two private mills were in the market, offering 20,000 mt and 15,000 mt for spot billet sales, but since rare bids have come down to $450-460/mt FOB against a tradable level of $470-480/mt FOB prevailing a week ago, no new deals have been done. These levels are much lower than a deal concluded at $485/mt FOB, as reported a week ago. Bearish sentiments also were aggravated by speculation that an export tender floated by the government owned mill RINL this week could either be deferred or cancelled due to low bids.