Global View on Billet: Prices fail to improve though better mood in some markets

- This week, sentiments in the major billet outlets have posted some improvement mainly amid the halting of the downtrend in Turkey and some slight price increase, while futures and spot prices in China also posted some rebound early this week. However, in general this has been not enough to make the markets turn around finally, and the mood for developments in the near future is cautious.

- Turkish longs producers have been evaluating the situation in the import scrap segment, where there has been no further price decline, and many believe the bottom has already been passed. Others, however, do not exclude another round of declines after the elections, given the problems with finished steel sales. For now, it seems that both buyers and sellers of scrap are happy with the current scrap price levels, and the market seems to have reached some sort of tentative equilibrium. In this situation, large Turkish mills prefer to refrain from import billet bookings, but re-rollers have chosen to restock. Around 9,000 mt of ex-Donbass billet have been disclosed to the market as sold at $550-552/mt CFR, although some report the actual prices were at $548-549/mt CFR. In addition, a Russian supplier has traded a total of 11,000 mt of billet for prompt shipment at $558-559/mt FOB, versus the initial offers of $560-565/mt CFR.

- The SteelOrbis reference price for ex-Russia billet currently stands at $520-535/mt FOB, which is a slight increase since earlier this week, but a $7.5/mt decline compared with the workable levels last week. Market availability is said to be limited at present given some production problems experienced by certain mills. In addition, some of them prefer to be active in longs exports instead of semis exports. The larger suppliers will most probably prefer to wait for a clearer import scrap situation in Turkey and will not rush to sell at low levels.

- Import billet prices have started to increase in Southeast Asia’s import market this week as Chinese traders have been voicing higher offers amid the hike in Chinese futures prices and somewhat better sentiment among Chinese exporters. Most Chinese traders, offering ex-China origin now, have started to give $535-540/mt CFR Manila prices, while last week offers from them for BF billets were at $525-535/mt CFR mainly. Late last week, a deal for 10,000 mt of ex-Malaysia IF billet was done at $510/mt CFR to the Philippines, but this price is not available anymore, even for IF the targets are at $525/mt CFR now. The SteelOrbis reference price for imported billet in Southeast Asia has increased from $525-540/mt CFR to $535-540/mt CFR.

- Nevertheless, ASEAN-based mills have announced a decline in their billet offers as they are still struggling to accelerate sales. Two major mills from the ASEAN region, from Indonesia and Malaysia, have been officially offering billet to overseas customers at $520-530/mt FOB, down by $10/mt over the past week. ASEAN mills have still been targeting distant markets like Turkey. With the freight up to $35-40/mt, offers for ex-Malaysia billet, which is not subject to import duty, would be at $555-565/mt on CFR basis. Moreover, in Southeast Asia offers for ex-ASEAN billet from mills are coming closer to Chinese traders’ offers.

- The workable prices for ex-Iran billet have further decreased this week since the mills have given in to the pressure from buyers amid the still rather pessimistic sentiment in the semis market globally. One of the mills has closed a 30,000 mt billet cargo at $473/mt FOB BIK, which is in line with the lower end of last week’s range. In addition, another deal for around 25,000 mt of Iranian billet has been reported at the end of the week at $460/mt FOB, which is considered a new workable level for now. The delivered price for Iranian billet position cargoes in Asia are at $535/mt CFR Thailand and have the potential to decrease, while in the UAE the levels of $510-515/mt CFR are under consideration. In Turkey, the truckloads of billet are at $530/mt CPT Iskenderun, which is the lower end of last week’s range.

- With local Indian billet prices falling to a five-month low, more sellers have entered the export market, thereby increasing domestic competition and exerting downward pressure on ex-India prices at a time when sentiments among buyers in key destinations have still been bad. Ex-India prices have been reported in the range of $495-500/mt FOB, down from $500-520/mt FOB a week ago. Actual deals have been concluded at lower levels, with more private mills becoming active in exports and increasing competition on the supply side, while buyers in Asia and the Middle East have continued to dictate terms. According to sources, a deal at below $500/mt FOB was heard from an Odisha-based integrated mill for delivery to a Singapore-based trading firm for onward sale. Another eastern region-based mill has reported a trade for 20,000 mt of prime concast billet for delivery to Oman at around $500/mt FOB.