Global View on Billet: Prices largely stable, but buyers currently do not believe in rebound

Though the global billet market has finally stabilized, most buyers lack belief in a rebound in the short term and most deals disclosed in different markets have still been heard at discounts. The outlook for May is stable to cautiously optimistic.

Asian billet export prices have remained rather stable this week as earlier attempts to push prices higher have largely failed and have not been reflected in deals. At the same time, transactions at lower levels done last week have been disclosed lately and signal that the real market has not improved. According to market sources, the latest deals for ex-Asia billet were done at near $420/mt FOB for June shipment or equivalent to this FOB price late last week. This has been assessed as a decline from the previous orders by the Indonesian mill at $424-425/mt FOB. A deal for Indonesian 3SP billet for June shipment was heard at $420/mt FOB done on Thursday or Friday last week. Indonesian official offer prices increased by $5/mt FOB early this week to $435/mt FOB, but on Wednesday returned to $430/mt FOB, for July shipment. Market sources believe that the Asian billet market failed to rise as expected ahead of the May Day holiday as futures prices were not so strong and overall demand was subdued.

There has been talk about two deals for Chinese billet done to Turkey late last week at $452/mt CFR for 3SP billet with manganese content of 0.60 percent and at $455/mt CFR for wire rod grade material. These CFR prices are equivalent to around $417-420/mt on FOB basis, excluding freight. The SteelOrbis reference price for ex-China billet has been at $425-430/mt FOB this week, moving up by a tiny $2.5/mt on average from late last week, based on the latest offers.

In the Turkish domestic billet market, integrated producer Kardemir opened sales this week at $485/mt and 495/mt ex-works depending on the grade and managed to sell up to 50,000 mt though the initial price expectations of buyers had been somewhat lower than that. Other domestic billet suppliers have been offering at $490-500/mt ex-works depending on the region, with no very considerable sales tonnages reported.

In the import segment, the latest billet offers from China, heard before the holiday, stood at $463-465/mt CFR and up to $470/mt CFR, rising from $455-460/mt CFR late last week. According to sources, the latest deals from China were closed at $452/mt CFR Izmir and at $455-457/mt CFR Diliskelesi for wire rod grade material. A position cargo from Malaysia has been offered at $470/mt CFR, with no information regarding a deal disclosed yet.

The SteelOrbis reference price for ex-Russia billet has settled at $425-435/mt FOB Black Sea, inching up by $2.5/mt on average since late last week mainly since sellers have resisted giving any of the lower offers which Turkish buyers had been asking for. In particular, one of the mills has been offering at $455/mt CFR Zonguldak this week, translating to $435/mt FOB Black Sea. There have been some rumors about deals for ex-Russia billet at slightly below $440/mt CFR, which has been not confirmed by the time of publication and was assessed by market sources as “unreasonably low.”

Only small Indian IF-based mills are heard to have been submitting offers in the range of $410-420/mt FOB, net of discount, but no deals have been confirmed during the past week. According to the sources, there was “market-level chatter” about two deals to the Middle East for an aggregate of 30,000 mt, but, since no details are available from either buyer, seller or trade circles, sections of the market dismissed it as just “rumours” and “speculative”. The SteelOrbis reference price for ex-India billet stands at $410-420/mt FOB, down by $5/mt over the past week. Meanwhile, in the local market, the uptrend in the market for semis has been reversed in reaction to finished long products entering a new down-cycle and the easing of the recent short-lived tightening of supplies from large mills.

*- latest deal done in late April