Global View on Billet: Prices finally move up everywhere amid rebound in China, higher scrap prices

The global billet market has finally entered a positive period with prices in most major markets increasing, even though trading has been rather limited as buyers are cautious. The major factors supporting billet prices are the improvement in China and positive movements in scrap.  

The rebound in the Chinese market has been closely watched by market sources after the easing of the trade war between the US and China. On Monday, the US and China announced a 90-day pause on "reciprocal" tariffs starting from May 14, which will lead to the US tariffs on Chinese imports retreating from 145 percent to 30 percent, while Chinese tariffs on US imports will fall from 125 percent to 10 percent. This has exerted a positive impact on market sentiments. The SteelOrbis reference price for ex-China has settled at $425-435/mt FOB, up by $7.5/mt from late last week with most offers at the higher end of the range. Most activity in offering billets from China abroad has been seen from international and regional traders, while Chinese mills have not been so confident, seeing an unfavorable change in the exchange rate. The official PBOC exchange rate has moved to below $1 = RMB 7.2.

The leading Indonesian mill has announced its billet price at $440/mt FOB, increasing the official offer by $5/mt since last week, while its slab offer stands at $445/mt FOB, both for July shipment. No deals have been reported at higher levels, while most bids have been not above $430/mt FOB.

Offer prices for imported billet in Southeast Asia have increased this week, following positive changes in mood in China, triggered by rising futures prices. But trading has been limited as buyers witnessed discounts just late last week and they are not sure how sustainable the current uptrend can be. Offers for ex-China 5SP 150 mm billet to the Philippines have been at $455-456/mt CFR, while those for the same grade but more popular 130 mm size have been at $462/mt CFR Manila and higher. As SteelOrbis reported last week, a deal for 10,000 mt of 5SP 130 mm billet was done at $447-450/mt CFR Manila. Offers for Chinese 3SP billet in the Philippines were at $450/mt CFR this week. Buyers in Thailand and Indonesia are bidding at $440/mt CFR and $445/mt CFR for 3SP billet, respectively, which cannot be found from major Asian suppliers.

Domestic prices for billet in Turkey have increased from $490-507/mt ex-works to $500-515/mt ex-works. In the Iskenderun region, the latest deal was closed at $497/mt ex-works, with mills further attempting to offer at $510/mt ex-works, though it seems the workable level is not above $500-505/mt ex-works. In the Izmir region, a local supplier is offering at $515/mt ex-works, while the import offer from the Marmara region stands at $520-522/mt CFR. In the Marmara region itself, according to sources, a smaller supplier is offering billet at $500-505/mt CPT.

Import billet prices in Turkey have inched up over the past week, following the slightly more positive mood in China. In fact, as of Friday, ex-Chinese offers are at $470-475/mt CFR and up to $480/mt CFR in some cases, and mainly for August shipments, while earlier this week the offers stood mainly at $466-470/mt and up to $472/mt CFR. Bids from buyers in Turkey are quite rare and are mainly at $460/mt CFR, particularly from the Izmir side. Ex-Indonesia offers are indicative at $475/mt CFR and, according to sources, an ex-Malaysia cargo for end-of-July shipment is on the table currently at $475/mt CFR, but it seems it is for 165 mm billet. In addition, one of the Ukrainian mills is offering billet at $500/mt CFR Diliskelesi, which seems on the high side. However, Ukraine can offer a shorter lead time compared to Asian suppliers, which may compensate for the relatively higher offer level, theoretically.

The number and volume of offers for billet from Russia and Russia-controlled Donbass have been limited lately, mainly due to the low bids and unfavorable rouble-dollar exchange rate. The latest deals from Russia for 5,000-6,000 mt lots have been closed to northern Turkey at $460/mt CFR for June shipments, while buyers’ price ideas for cargoes with a longer lead time are at $450/mt CFR and even below. The SteelOrbis daily reference price for Russian billet to be shipped from the Black Sea has settled at $440/mt FOB, up $5-10/mt over the past week.

Ex-Iran billet trading activity has remained quite slow with prices being workable only in the MENA region, mainly the GCC, and in Turkey (for small lots). The price idea is still at $410-420/mt FOB for Iranian billet, with the upper end representing mills’ targets for cargoes with a short lead time. There is a 30,000 mt lot offered to the market at $420/mt FOB, with bids at $415/mt FOB. In addition, some smaller producers seem to be content to sell at $395/mt FOB, while similar levels have been reported for small billet lots available from ports. In the GCC, ex-Iran billet is on offer at $440-445/mt CFR, the same as last week. In Asia, the latest billet offers to Indonesia have been set at $455/mt CFR for 5SP billet. In addition, Turkish buyers have reported offers at $440-450/mt CPT for small truckloads. Overall, billet production in Iran is once again under pressure as electricity supply issues have reappeared with the arrival of the summer period. In particular, Iranian sources report that some mills are subject to supply restrictions for two or three days per week.

Ex-India billet prices have increased in the past week amid rumors of deals in the Middle East at higher levels, but a significant section of market sources believe that the sustainability of the price trend in the coming period will be driven by China. The SteelOrbis reference price for ex-India billet has improved to $425-435/mt FOB, moving up by $15/mt from the indicative level seen last week. Although no deals have been confirmed in the market, rumors have been rife of at least two Indian mills concluding contracts aggregating up to 50,000 mt in the Middle East at $430-435/mt FOB. Moreover, no confirmation of these two trades even at $430-435/mt FOB was available, and some market participants believe that “these rumors reflect hopes of a rebound round the corner”.