Global View on Billet: Price trend not quite settled as China weakens further while other suppliers take upward steps

The market sentiment and price movements have been uneven this week in global steel billet market. While China’s positions have weakened slightly on lower futures, some of other Asian mills have increased their offers, being not under much pressure to sell. In Asia, Iranian offers were among the most attractive ones, while the sales from Asia to distant markets have been reportedly challenging. In fact, the buyers in the MENA region are slow due to ongoing Ramadan, while Turkey is hesitant to book in large volumes due to uncertainty in terms of rebar sales potential.

The moods regarding Chinese billet have worsened, following a decline in futures, although some suppliers have been trying to resist the downturn. By the end of the week, the ex-China billet prices have settled at $425-435/mt FOB, down from $435-440/mt FOB seen previously. Some of the traders have reported that they see $430-435/mt FOB as a tradable level and, according to market talks, there was a position taken at the higher end of the range this week. Sources reported two deals – to Turkey and Saudi Arabia – this week, at $465/mt and $470-472/mt CFR, but none of them has been confirmed. In Turkey, the realistic levels from China stood at $476-485/mt CFR this week and in Saudi Arabia the offer levels were at $473/mt CFR with two out of three key importers denying the mentioned purchase.

Export offers from other Asian suppliers, namely Indonesia, increased by $10/mt to $455/mt FOB since the mill is reportedly not under pressure to boost the sales, at least for now. Ex-Indonesia indications to Turkey and North Africa stood at $485-488/mt CFR this week, which is not considered quite workable.

In Southeast Asian import billet market, the business activity has been modest this week with buyers seeking for most attractive prices. As a result, Iranian offers have attracted attention and a 35,000 mt deal was closed at $447/mt CFR Indonesia. Chinese billet offers to Indonesia and Thailand have been confirmed at $450-455/mt CFR for 3Sp material, while 5SP grade has been offered $2/mt higher than that. In the Philippines, the mentioned billet grades were offered once again from China at $455/mt and $460-461/mt, respectively, both on the CFR basis, while bids stood at $5-10/mt below these levels. No workable offers from Russia have been reported this week, following deals closed earlier in March at $448-450/mt CFR Taiwan. The SteelOrbis reference price for import 3SP and 5SP billet has remained stable from last week at $450-455/mt CFR, as it excludes sanctioned material from Iran or Russia.

In Turkey, the domestic billet prices in the Izmir and Iskenderun regions are at $525-530/mt and $530-535/mt ex-works with slight discounts possible. A Marmara region-based mill has been offering $515/mt FOB for billet or around $525/mt CFR Izmir region. The market is expecting Kardemir to open new billet sales in the local market with a price increase in the coming weeks.

In the import segment, the mills’ activity is relatively modest despite most of the offers are workable against own billet production cost, which is estimated currently at around $535/mt. The key reason for the slow import business, despite higher scrap, is the uncertainty regarding the longs sales, especially now when the domestic demand is jeopardized by the ongoing political unrest. China’s offers have been mainly reported at $480-485/mt CFR although one of the traders has been offering $476/mt CFR, mills said. Indonesia and Malaysia stood at $485-488/mt and $495/mt CFR this week with no deals reported.

Russia-based billet exporters have been trying to increase their offers to $470/mt CFR Turkey which is around $450/mt CFR, while some suppliers are standing at not below $455/mt FOB for May-early June shipments. The fluctuating exchange rate and issues with the local railroad transportation continues impacting Russia’s exports. In addition, the price level for Russian and Donbass material is sort of restricted by the level of offers, set by China in Turkey’s import segment and local Kardemir. The SteelOrbis reference price for ex-Russia billet has settled at $450/mt FOB Black Sea, up by $5/mt on average from late last week.

Iranian billet exports have been relatively quiet lately, particularly due to the holiday period in Iran itself and in most of its sales destinations. The latest deal for around 30,000 mt of ex-Iran billet has been closed at $422/mt FOB, which is considered to be slightly on the higher side. The general level of the workable prices for Iranian billet is evaluated at $415-425/mt FOB for the time being. In the UAE, the offers are at $445-455/mt CFR, while in Asia the latest offers have been reported at $445-450/mt CFR with no deals reported just yet.

Indian billet prices have increased from $420-425/mt to $420-440/mt FOB over the week, supported mainly by the circulating market talks about some deals closed at higher level. Particularly, there has been a rumor about a 30,000 mt deal at $440-445/mt FOB with no confirmation to follow. “Even assuming that prices have bottomed out, speculation of them touching $450/mt FOB seems unreasonable and such a recovery seems too fast,” an Indian source said. In the domestic market, billet trade prices have lost INR 200/mt ($2/mt) to INR 42,700/mt ($493/mt) ex-Mumbai but have gained INR 350/mt ($4/mt) to INR 40,350/mt ($466/mt) ex-Raipur in the central region.