Global View on Billet: Prices reach ceiling, but decrease in near future doubtful

This week has brought almost full stability to the major billet markets globally and, together with stable prices, trading activity has faded away, signaling a significant worsening of market conditions compared to the previous few weeks. However, high scrap prices and volatile freight rates are likely to keep prices stable and prevent any considerable declines in the near future.

Chinese billet prices have been rather stable in both the local and export markets, being among the most competitive in the international market, even though buyers have not been so active lately. Small discounts of not more than $2-3/mt were available from some suppliers and the tradable level is said to be close to $460/mt FOB. There are no big positive signals for the Chinese market in April, even though it is part of the traditional peak season, with local demand seeming to be stable. Also, small discounts for billet are possible amid softer prices of raw materials like iron ore (which posted a much bigger decline than steel prices this week).

The leading Indonesian mill increased billet prices by $10/mt early this week, rolling them back by Thursday, with June shipment offers still staying at $485/mt FOB on Friday. There were very few inquiries from the Middle East and in general, with high freight rates and war-related risks, market sources see an increase on FOB basis as being almost impossible, at least for now. At the same time, ex-Indonesia slab offers have increased by as much as $20/mt to $540/mt FOB this week, as there are more hopes of pushing up prices in this segment, considering the continued shortage.

Offers for import billet in Southeast Asia’s import billet market have remained stable. However, market sources share a rather negative outlook, seeing softening futures prices in China. The latest offers for 5SP billet were coming at $490/mt CFR to the Philippines earlier this week, but activity has been close to zero and a few bids were voiced at just $480/mt CFR. Similarly, offers for 3SP billet, mainly from China, have been heard at $485/mt CFR in Indonesia and $485-487/mt CFR in Thailand, also stable from last week. One deal was disclosed as done earlier in April at $485/mt CFR and buyers are targeting $480/mt CFR at the highest.

Sentiment in the Turkish domestic billet market has weakened over the past week, following the soft trend in the rebar segment, where prices have decreased from $600-620/mt to $585-615/mt ex-works. As a result, domestic producer Kardemir announced its new billet sales at the same prices as last week, at $540/mt and $550/mt ex-works, but was able to sell only 12,000 mt, versus almost 40,000 mt sold last week. In the Iskenderun region, offers have decreased by $5/mt to $550-555/mt ex-works, with small volumes sold early this week.

Import offers from China have been mainly set at $515/mt CFR, while some buyers seem to be ready to book at slightly lower levels, mainly due to reported delays in deliveries. Ex-Malaysia billet for June shipment is at $535-540/mt CFR, while the indicative price for Indonesia is at $485/mt FOB or around $540-545/mt CFR for June shipments. Ukraine is offering at $540-545/mt CFR as well, while the latest workable levels are $5-10/mt lower.

Ex-Russia billet offers have been reported in Turkey at $503-510/mt CFR, up by around $5/mt over the past week, mainly for May shipments. The SteelOrbis daily reference price has increased by the same amount to $470-480/mt FOB, which may become workable in the near future. The main advantage of Russian billet is its short lead time and the possibility of booking in smaller volumes compared to Asia.

Ex-India official billet offer prices have been maintained at $480-490/mt FOB, while buyers in certain Asian markets have been seeking discounts to enable deals in the range of $480-490/mt CFR, but these prices have not been accepted by sellers. Indian sellers have preferred to focus on local sales amid rising demand for semis from secondary mills and robust gains seen in the finished steel market. Billet trade prices have gained INR 800/mt ($9/mt) to INR 47,150/mt ($507/mt) ex-Mumbai and are up INR 1,000/mt ($11/mt ) to INR 42,800/mt ($461/mt) ex-Raipur in the central region.