Global View on Billet: Prices rather stable amid no positive signals except from futures in China

Prices for billets in the international market have been rather stable in mid-July as from one side they have been supported by the steady to high raw materials, but no further gains have been seen as overall demand has been weak and only rises in Chinese futures have been seen as positive signals.

Ex-China billet export price has increased by $2.5/mt over the week to $430-440/mt FOB. With the recent production cuts in Tangshan and increases in rebar futures, average local billet price in China has added RMB 30/mt ($4/mt) over a day on Friday. The lowest price the buyers still can get is $430/mt FOB from China, but most offers are higher now – at $435-440/mt FOB. One of the important reasons for steel prices from China in the export market staying high is the increase seen in raw materials. In particular, iron ore fines have broken a $100/mt CFR mark. Also, coke plants have finished first round of local coke price increase by RMB 55/mt. 

Indonesian mill cut billet offer by $5/mt on Wednesday, but increased it back by $5/mt to $440/mt FOB by the end of this week. There have been no deals heard for ex-ASEAN billets lately, except one trade for Malaysian billet, which has already been on water and has finally been sold to Turkey.

Though moods have been positive in China and in whole Asia, trading in the SE Asian import market has been almost halted. Offers for 5SP billet to the Philippines have been at $450-460/mt CFR with some sources said that a level of $450/mt CFR is possible only from traders having positions and it is rare at the moment. There has been a rumor about negotiations for ex-China billet in the Philippines at $450/mt CFR, but a number of market sources said that the price is too high for most buyers and most bids for 5SP 150 mm billets are at $435-440/mt CFR. It could be only for a very small volume of 130 mm, market sources said. Offers for 3SP billets in Indonesia and Thailand have been at $450-455/mt CFR with no deals done. 

In Turkey, the domestic billet market has been dull this week with prices standing at $490-500/mt ex-works base in most of the regions except Karabuk. In fact, Kardemir is expected to open new billet sales next week and the demand is foreseen to be there since, according to sources, many buyers would take an opportunity to book billet with a short lead time and deferred payment under the current market conditions.

Import offers from China are now at $470/mt CFR Turkey and slightly above, up from $465-469/mt CFR seen in the past week. Indonesia is indicatively at $478/mt CFR, but for October shipments, therefore this offer is not quite interesting for the buyers in Turkey. However, an Iskenderun region-based buyer has booked a stressed 20,000 mt billet cargo from Malaysia at $465/mt CFR, sources say. Ukraine is in the market with $490/mt CFR for September shipment, in line with the offers for August seen in the past week. Another mill is offering $515/mt CFR, according to buyers, but the level is not considered workable.

Billet suppliers from Russia and Donbas have also taken an advantage of short lead time over most Asian sellers and of a possibility to buy in small lots. According to sources, the latest deals have been closed this week at $450-455/mt CFR, which makes around $430-432/mt FOB. The SteelOrbis daily reference price for Russian billet to be shipped from the Black Sea has been settled at $433.5/mt FOB on average, $4/mt down over the week.

Most Indian sellers kept offers at $425-430/mt FOB, but some Tier II mills are reported to have submitted higher offers in the range of $435-440/mt FOB. However, deals at higher levels have not been confirmed in the market, while a few moderate-volume trades to the Middle East were reported at the lower end of the range. A medium-scale mill reported a trade for 20,000 mt at $435/mt FOB to an undisclosed destination. Also, the same seller has reported a trade for 15,000 mt for delivery to Oman at a lower price of $425/mt FOB, the sources added. With reduced billet supply from Iran due to production difficulties and rather high other Asian offers, Indian mills have had advantage in the Middle East, especially if they can offer shipment before the end of September.