Global View on Billet: Prices fluctuate at low levels in major outlets, no optimism ahead

The situation in the global billet market has remained difficult this week with prices staying at low levels, with not even a small positive sign seen from China, and with demand rather limited as buyers have been waiting for some further discounts.

Only small changes have been seen in Chinese billet export prices. The SteelOrbis reference price for ex-China billet increased slightly in the middle of the week - by $2.5/mt on average to $422.5/mt FOB. Firm offers have been heard at $420-425/mt FOB from different traders, while buyers have been asking for $5-10/mt discounts. Chinese billet prices are still among the most competitive globally. China and the US have reached an agreement, and this is supporting sentiments in the steel market in general. But market conditions in China have been stable with some steel output cuts, but demand is still weak, so in general no improvements have been seen this week. 

Though most Chinese exporters have been keeping prices stable or trying to increase offers by a few dollars, traders have still been aggressive and managed to sign sizable deals with a further price decrease. According to market sources, up to 80,000 mt of Chinese 150 mm 5SP billets have been traded to Indonesia at $438/mt CFR, which translates to around $433/mt CFR for 3SP billet. The previous deal for Chinese 150 mm 5SP billet to Southeast Asia was done to the Philippines at $440/mt CFR a week ago. In addition, a few deals for Asian origin 130 mm 5SP billet have been signed at close to $440/mt CFR to the Philippines, which translates to $435/mt CFR for 150 mm 5SP, $5/mt lower over the week. Negotiations for 150 mm 3SP billet, mainly Chinese origin, have been heard in Indonesia and Thailand at $430-435/mt CFR, with a few market sources saying that the tradable level is not above $430/mt CFR. 

Official offers for Indonesian billet have been lowered by $3/mt on June 10 to $427/mt FOB for September shipment. Even though this level is up $2/mt from offers seen late last week, it signals weak sentiments in the billet segment in Asia. The latest deal done by the Indonesian mill was a 50,000 mt trade at $425/mt FOB for the Middle East, the UAE in particular, done last week.

In Turkey, local billet market activity has been limited mainly to the sales of Kardemir, which announced prices at $495/mt ex-works for S235JR and $505/mt ex-works for B420 steel grade. The mill has managed to sell up to 30,000 mt while usually the regular volume is higher, which signals a relatively quiet market. In the Izmir region, the offer level has remained at around $507-510/mt ex-works, while in the Iskenderun region the prices have stood at $500-505/mt ex-works this week, with no deals reported.

As for import offers, ex-China indications have been reported mainly at $455-460/mt CFR for end-of-July and August shipments, while the buyers’ price ideas for 50,000 mt lots at at around $450-452/mt CFR and below. The mills are citing weak scrap prices and challenging rebar sales as the main leverage to put pressure on import billet prices. However, many believe that import scrap prices are not going to drop dramatically in the coming period, mainly due to the controversial situation in the US. In addition to China, the offers from Malaysia have been reported at $480-485/mt CFR for 165 mm billet, while 150 mm material is priced generally $7-10/mt higher.

Russian billet exporters, shipping from the Black Sea, are still almost absent from the export market, with only some indications heard at $455-460/mt CFR Turkey, translating to $435-440/mt FOB Black Sea. While the ruble stays below $1= RUB 80, sales from Russia’s Black Sea region will remain poor, market sources believe. But a deal for ex-Russia billet is heard to have been done to India at $457/mt CFR for prompt shipment. Since the tradable level for August-September shipment billets in Southeast Asia and East Asia has been too low and the market has been dominated by Chinese sellers, some Russian suppliers, shipping from the Far East ports of Russia, have been trying to push volumes to other destinations.

Ex-India billet prices are still in the range of $415-425/mt FOB, but most sellers have had no expectations of successful deals at a time when the tradable level is hardly above $410-415/mt FOB. Meanwhile, in the domestic market, the mood and trade conditions have worsened further with prices of semis suffering major setbacks in reaction to falling demand and prices of long products. With secondary mills lowering merchant offtake of semis, billet trade prices have slumped INR 1,500/mt ($18/mt) to INR 39,900/mt ($467/mt) ex-Mumbai.