Global View on Billet: Prices indicate sharp falls everywhere

- This week, the global billet market has posted sharp drops in almost every outlet, against the backdrop of the ongoing weakness of demand and excess supply, while the fall in the scrap segment and the negative situation in China have added to already bearish market sentiments. Some market sources believe that this is not the end of the downtrend, even though suppliers may start to sell with losses.

- The sharpest fall in billet prices has been seen in the ex-Russia market with a $50/mt drop over the past week. The general level has been settled at $520-540/mt FOB on Friday, with the wide range explained by the aggressive offers and sales of billet from Ukraine’s Donbass region by Russian sellers, and the higher prices given for ex-Russia origin billet from large mills.

- If talking about billet shipments from Russia’s Azov Sea and Black Sea ports, Turkey and Egypt remain the key buyers. Although these countries continue working with Russia despite the sanctions-related risks, they are using the suppliers’ difficulties in selling in order to exert pressure and get sizeable discounts. This week, a significant decline in scrap prices has supported the buyers and prices have dropped a lot. In Turkey, one large lot was booked at $565/mt CFR and, according to sources, it is a cargo earlier booked at a higher level by one of the buyers and then rejected. Another small lot was booked at $585/mt CFR and overall over the week the prices have decreased in Turkey by $35-45/mt. Turkish origin billet has been available at $640-660/mt ex-works in the local market, with the potential to drop to $630/mt ex-works in the Iskenderun region. Export offers from Turkey are at $630-650/mt FOB and the Turkish mills are looking to sell to distant markets such as the EU and Latin America, since there is no point in competing with Russia in North Africa. 

- In Egypt, workable prices declined from $640/mt CFR last week to $620/mt CFR, $610/mt CFR and then to $595/mt CFR in small deals, while new bids are $15/mt lower than that. It is worth mentioning that all the mentioned deals were closed this week for ex-Donbass billet, which is being sold by Russian mills and traders through the Russian ports of Rostov and Novorossiysk.

- The Chinese billet market has fallen in a few rounds this week amid losses in local prices, the negative demand outlook and falling rebar prices. The tradable level for imported billet was reported at $570-590/mt CFR on Tuesday, while Russian suppliers have been in negotiations with other Asian buyers at $610/mt CFR or above. 

But by the end of the week, offers from Russia to China have fallen to $570/mt CFR. Moreover, information about an ex-Russia deal emerged at around RMB 3,600/mt CFR, which translates to around $538/mt CFR at the current exchange rate, though this could not be confirmed by the time of publications and was assessed by market sources as a “shocking price.” 

- Prices for imported billet in Southeast Asia have resumed their declines after a one-week break, supported by the scrap price decline. Under pressure from buyers, ex-ASEAN suppliers for both BOF and EAF billets have lowered offers to $640-660/mt CFR Manila, which is around $15/mt below the levels seen a week ago. And buyers’ price ideas have fallen to $630-640/mt CFR, according to sources. EAF-based mills are likely to stay flexible and to cut prices for billets even more next week. One deal has been reported to Thailand for ex-ASEAN origin billet at around $635-640/mt CFR this week. 

- Despite the pressures of mounting billet inventories and slightly lower prices, Indian billet exports have remained almost inactive in the absence of buying from China and cheaper options available for buyers in other markets in Asia and the Gulf. Ex-India billet prices are at $580-610/mt FOB, with the midpoint at $595/mt FOB, compared to $590-620/mt FOB a week ago, but no confirmed deals or firm negotiations have been heard in the market as buyers have remained cautious. While Indian state-owned mills are still targeting prices at $610/mt FOB minimum, the tradable level is definitely below the $600/mt FOB mark, sources told SteelOrbis. 

- Overall, the situation regarding Iranian steel exports is ambiguous, with the continuing mismatch between offers and bids. In particular, earlier this week an Iran-based billet mill was seeking to get $565/mt FOB in its billet tender, while the bids were voiced at $540/mt FOB at the highest. Consequently, the tender in question was cancelled, with the supplier opting to watch market developments closely. Another mill has also floated a tender for 40,000-50,000 mt of billets, but the results are as yet unknown. Following the sharp drop in ex-Russia prices seen by the end of the week, Iranian mills are likely to be forced to cut prices next week, according to sources, or withdraw from the market.