Global View on Billet: Prices fail to rise amid no fundamental improvements despite some positive expectations

- Prices for billets in most major markets have failed to improve this week even though a few positive signals have still been seen in the market and market sources usually anticipate a rebound ahead of stronger seasonal demand for construction steel in September and October. Moreover, some declines have even been seen in the Asian market despite recent rises in China.  

- Ex-China 3SP billet reference prices have reached $510-520/mt FOB by the end of this week, increasing by $10/mt over the week, though early this week even the levels of $490-495/mt FOB were available. This increase has been mainly based on expectations for a demand improvement in September and October and on rising futures prices, though overall production in China has remained high and local spot prices have posted just small increases. Market sources believe that supply in the Chinese market will remain high in September and prices are unlikely to increase strongly with no domestic demand revival expected in the short term as heavy rainfalls are predicted and the supportive measures announced by the government seem insufficient to bolster steel demand at least in the short term.   

- Prices for ex-ASEAN billet from major mills have been corrected down again this week as suppliers have been trying to accelerate sales, while bids from the regional buyers in Asia have been at low levels. Ex-Indonesia billet offer levels have come down to $495/mt FOB, down by $5-10/mt from the official offers reported early last week. Some market sources said that small deals have been done at this new level to traders, though the details have not been available by the time of publication and overall sales are not expected to reach large volumes as end-users’ bids are still going down and the near-term outlook is bleak. Ex-Malaysia offers have been reported at $495-500/mt FOB. 

- Import billet offers have declined further in the Southeast Asian market, but trading has remained almost at a standstill since buyers, in the Philippines in particular, are still very negative and are waiting for offers to hit and drop below the $500/mt CFR mark. Offers for 3SP billet from traders for both Chinese and ASEAN origins have been at $505/mt CFR Manila, while those for 5SP have been at $510/mt CFR. Traders have remained bearish even seeing some rebound in China as supply in the market is still exceeding demand. In Thailand and Indonesia, new bids have not been voiced above $490/mt CFR, versus ex-ASEAN offers at $510/mt CFR and the ex-Iran indicative levels at $495-500/mt CFR. 

- In East Asia, Taiwan in particular, a new deal for ex-Russia 150 mm billet has been reported at $495/mt CFR, while the previous deal, for ex-China material, was reported at $508/mt CFR last week. “Now, no one even considers a billet price at $500/mt CFR,” a trading source said. 

- In the Black Sea billet export market, deals have still been rare as exporters are targeting higher prices and, with increased freight rates, customers are not so ready to accept sellers’ target prices. There has been information circulating in the market about a deal for 10,000-20,000 mt of ex-Donbass billet at $485/mt CFR Turkey, which translates to around $455-460/mt FOB Black Sea. This level is in line with the tradable level reported by buyers last week, but the deal has not been confirmed by the time of publication. Most market sources agree that suppliers are now targeting $470/mt FOB and can hardly accept lower than that for medium and big lots, with only one mill heard to be voicing $460/mt FOB at the lowest possible. A few more bids from Turkey have been reported at $480-485/mt CFR early this week. At the same time, bids for smaller lots of 3,000-5,000 mt have been reported from some buyers in Turkey at $495/mt CFR. 

- Ex-India billet trade has continued to remain inactive amid the further widening of the bid-offer gap and robust merchant demand in the local market as secondary mills attempt to raise outputs amid an emerging market shortage of rebar. The SteelOrbis reference price has been corrected up slightly by $5/mt over the past week to $505-515/mt FOB amid the unwillingness of exporters to sell cheaply abroad. With the slowdown in arrivals from integrated mills for merchant sales, local billet prices have recorded major gains for the second consecutive week. Billet trade prices have surged by INR 2,400/mt ($29/mt) to INR 47,000/mt ($569/mt) ex-Mumbai and have gained INR 2,300/mt ($28/mt) to INR 45,100/mt ($546/mt) ex-Raipur in the central region.