Global View on Billet: Prices on the rise, but cautiously

Global billet prices have been on the rise this week, supported by the still positive mood in China and the rebound in Turkey’s import scrap segment. However, overall trading activity has been weak as buyers have been reluctant to accept higher prices so far.

The mood in the Asian billet market has been supported by the recent gains in the local Chinese market. However, ASEAN region-based mills have been targeting only limited price increases for now, trying not to scare buyers off. Ex-Indonesia 3SP billet offers have been announced at $500/mt FOB, up from the previous deals done at $490-494/mt FOB for 5SP and one for 5SP reported at $498/mt FOB last week. Some market sources believe that the limited increase in prices from the ASEAN region is due to the ongoing high levels of unsold volumes for December shipment.

The SteelOrbis reference price for ex-China 3SP billet is at $500-505/mt FOB, though the level is slightly below that seen last Friday at $500-520/mt FOB. Market sources are not inclined to [JF1] assess this as any kind of decline. “Offers at $505/mt FOB are still high for buyers, but reasonable for sellers,” a Chinese trader said. The current offers are above the last deals done at close to $490/mt FOB. Prices in China have been supported by the recent government stimulus and expectations of an increase in construction and infrastructure spendings in the fourth quarter. However, steel production cuts have been not as severe as expected, so prices cannot rise so rapidly and confidence in the uptrend is still not so strong and prices are mainly being pushed up by high raw material prices and by sentiments. 

Prices for imported billet in Southeast Asia have continued to improve gradually this week even though trading has been limited and buyers in the Philippines have been on holidays this week. The SteelOrbis reference price for imported 3SP and 5SP billet in Southeast Asia has increased to $515-518/mt CFR this week, versus $510-517/mt CFR last week, excluding ex-Iran and ex-Russia sanctioned materials, which are quoted at lower levels. Bids in the Philippines are still at $510/mt CFR Manila, but some deals may have happened at $515-518/mt CFR, in line with the lowest offers at the moment.

At the same time, though a mainly positive mood has prevailed in Asia, buyers have been reluctant to accept higher prices in deals. Moreover, according to sources, around 30,000 mt of 150 mm billet were traded by a Russian mill to Taiwan at $490-493/mt CFR late last week, down from the previous deals at $495-498/mt CFR, as SteelOrbis reported earlier.

In Turkey, some customers have accepted higher prices for ex-Russia billet and have booked some 20,000 mt for prompt shipments at $510-520/mt CFR. These levels are considered a bit high for today’s market, while offers for end of November-December shipments are at $500-510/mt CFR this week. The sellers of larger tonnages have been receiving bids of $480-485/mt CFR maximum, while their targets have been in the higher numbers given the surge in import scrap prices. The SteelOrbis reference price for ex-Black Sea billet has increased by $7.5/mt over the past week to $470-480/mt FOB. The upsurge in the import scrap segment has brought some optimism to the market and has been reflected in the semis segment. Material to replace billet is neither plentiful nor cheap, and therefore of less interest in the eyes of Turkish mills.

In Iran, some mills have sold regular billet cargoes, but have failed to achieve a price increase. One mill has sold a 30,000 mt lot at $470/mt CFR, which is stable as compared to the previous export sale. In the UAE and Oman, offers are at $495/mt CFR and negotiations are underway. In Asia, the offer level softened back to $500-505/mt CFR, which leaves limited margins for traders’ position cargoes. In Jordan, offers and workable prices are still voiced at $535/mt CFR. In addition, one of the key Iranian mills opened two tenders. One of them is for 20,000-50,000 mt of prime steel billet ready for end-of-December cargo, while the other trend is for the same tonnage of slab. Both tenders have deadlines of November 7.

Local Indian billet prices have continued to move down gradually, while export quotations have remained stable, with trading activity improving for small volumes, even though most deals are heard to have been done at a discount. Large local mills have maintained their tradable levels for billets in the export market unchanged at around $490/mt FOB, but some sellers are rumored to have concluded deals for small tonnages at discounts. An Odisha-based mill sold 15,000 mt to an Asian buyer at $475/mt FOB, while another eastern India-based seller made a trade at an official price of $480/mt FOB, while market intermediaries claimed the price to be slightly below this. The deals could not be confirmed by the import side, though the price for Asian buyers translates to around $505-510/mt CFR and could be competitive.

* - latest deal prices