Global View on Billet: Prices post confident increase amid ongoing war, rising scrap prices

The uptrend in the global billet market has continued this week and sellers have been more confident that the current offer prices are acceptable to buyers, considering the rising prices of raw materials, of scrap in particular. Following the increases seen over the past three weeks, billet prices may stabilize for some time, sources believe, but only if the freight market becomes less volatile.

One of the important trends seen this week has been the increased demand from the Middle East for import billet. The major Indonesian mill managed to sell 100,000 mt of billets for May and June shipment to the GCC, Oman and the UAE in particular. The two contracts in question were done at around $485/mt FOB, though the CFR levels were from $525/mt to $535/mt due to the different transportation costs sand war-related risks. The interest in Asian billet in the GCC was due to the lack of hopes that Iranian billet will come back to the global market anytime soon, while there is also a shortage seen in the BPI-HBI market. Though the ex-Indonesia sales price is $5/mt below the offer seen late last week, most market sources assess the market as stable, considering that the producer has not concluded sizable billet sales in the export market for a while.

Ex-China billet reference prices have been fluctuating in a limited range this week, at $460-475/mt FOB. Though early this week suppliers were targeting the higher end of this range, with no decent support from the local market, the tradable level has been at $460-465/mt FOB by the end of the week and small-volume deals have also been reported at prices not higher than these levels. On the one hand, Chinese suppliers are facing rather high raw material prices - iron ore is fluctuating near $110/mt CFR, while there has been a first round of local coke price increases this week, and transportation costs are high. However, on the other hand, demand locally has been only stable and there has been a slight improvement in the situation in the freight market, signaling that Chinese and other Asian billet prices may only fluctuate in a limited range in the near future.

Southeast Asian billet importers have been eager to buy lately, seeing rising fuel prices and not expecting a price correction anytime soon, while the absence of Iran is also a very important driver. A deal for 20,000-30,000 mt of ex-China 150 mm 5SP billet was reported to the Philippines at $490/mt CFR, up by $7-9/mt compared to the previous sales to this destination. Also, 10,000 mt of a mixed billet cargo of 3SP and 5SP billet was traded to Thailand at $487/mt CFR on average. Taiwanese buyers have booked ex-China vanadium-added billet at $500/mt CFR, and ex-Russia base 3SP billet at $490/mt CFR this week. Offers from China to Southeast Asia have already increased to $495-500/mt CFR by Thursday, but market sources agree that, while major buyers have replenished stocks for May and early June, they will resist further increases.

In Turkey, domestic billet prices have settled at $530-540/mt ex-works/CPT, up from the previous $515-525/mt ex-works, following the uptrend in the rebar market. Locally, rebar is now at $585-605/mt ex-works, while some mills are even aiming at a slightly higher level. However, the workable prices for rebar in the local market are at around $575-585/mt ex-works, while it seems that buyers are avoiding building up stocks since support from end-user demand is still not sufficient.

Import billet offers to Turkey stood at $525-535/mt CFR from China early this week, but later the price indications softened to $510-515/mt CFR, considering also a slight cooling down of freight rates - from $50-55/mt for 50,000 mt lots to around $45-47/mt, sources reported. According to sources, a 50,000 mt deal was closed at $508/mt CFR Izmir region in the middle of the week, while some bids have been placed at $505/mt CFR. There has also been talk about earlier-booked billet cargoes from China being delayed and one or two of them being cancelled, which may result in additional demand for billet and scrap. Ex-Malaysia billet was on offer earlier in the week at $530-535/mt CFR, while Ukraine was offering a limited tonnage at $530/mt CFR for May shipment.

In the GCC, where war-related logistics issues remain a major problem for the steel business, there has been some interest in billet imports, partially due to shipment disruptions from Iran. According to sources, a mill in Oman has recently booked an ex-Asia 50,000 mt cargo at $526/mt CFR, while a UAE-based steel producer has closed a deal for 50,000 mt of billet from Indonesia at around $535/mt CFR. In Saudi Arabia, billet offers from Asia have been reported at $525-530/mt CFR.

The ex-Russia billet reference price has reached $455/mt FO Black Sea this week after deals done at near $450/mt FOB and the amid rise in scrap prices in Turkey in the middle of this week. Early this week, 10,000 mt of ex-Donbass billet were sold at $478/mt CFR Bartin, translating to $450-451/mt on FOB Black Sea basis. This was in addition to a small sale from Russia heard at $483/mt CFR Izmir late last week. However, after deals for scrap were disclosed on Wednesday at higher levels, there have been no firm offers and most market sources believe that targeted level from Russia will be at $485/mt CFR at the lowest now, which is $455-460/mt FOB.

Offers for ex-India billet have added at least $5/mt over the past week to $470-480/mt FOB, with at least one deal for 30,000 mt discussed at the lower end of the range as having been done to an Asian trader. Indian suppliers also explained this increase by rising input costs, though in general they say there is no billet shortage globally. At the same time, local billet prices in India posted some decline this week, decreasing by INR 100-900/mt ($1-10/mt), depending on the region, due to poor demand.