Global View on Billet: Prices retreat in Asia, Turkish market almost silent after earthquakes

- This week, two massive 7.8 and 7.6 magnitude earthquakes hit Turkey, severely impacting over 10 cities and resulting in massive casualties, a humanitarian catastrophe, infrastructure damages, and massive logistical disruptions in the affected areas. As a result, the Turkish market has been almost entirely silent, excluding some rare domestic trades in the northern region. At the same time, downward expectations have materialized in the Asian market after the previous rise, and major traders and mills have lowered prices to attract customers. 

- In Turkey’s Iskenderun region, hit by the earthquakes, several steel producers are located, such as Isdemir, Koc, Bastug, Ekinciler, Toscelik, and Yazici. Flats and longs re-rollers are also based in the region, with Tosyali Toyo, Atakas, MMK Metalurji, Corbus and Yolbulan being among the largest. According to SteelOrbis’ estimations, the Iskenderun region-based steel output accounts for 25-30 percent of Turkey’s total annual volume. A lot of market players do not expect most facilities to be seriously damaged as such structures are usually quite strong. But the humanitarian situation in the region, aggravated by the cold weather and damaged civilian infrastructure, is the top priority for now.

- Turkey-based integrated producer Kardemir has traded medium-volume batches this week and will most probably restart trade at renewed levels once the market gains some more clarity. On February 9, Kardemir decided to close its domestic billet sales, having traded around 20,000 mt at $635-640/mt ex-works depending on the grade and taking into account deferred payment conditions, up by $15/mt from its previous levels in late January. At the end of last week, the general billet offer level in the domestic market stood at $650-660/mt ex-works with the upper end fixed in deals in the Iskenderun region. It is clear that the mills located in the earthquake-affected area have suspended operations and are focused on tackling its effects.

- Ex-Russia reference price has been at $555-575/mt FOB, down by $12/mt since late last week, which, however, happened because lower-priced deals signed last week had come to light early this week. Last week, in addition to the earlier reported deal for 3,000 mt of ex-Russia billet at $600/mt CFR and negotiations at $605/mt CFR, another small lot changed hands at $575-580/mt CFR, according to new information. This week, due to the tragedy in Turkey and almost no demand in North Africa, Russian billet exports have almost been at a standstill.

- Prices for imported billet have been gradually going down this week in Southeast Asia, with traders having position cargoes booked earlier remaining the most active. The price level has slipped below $600/mt CFR in deals. In particular, in the first half of this week, a contract for 30,000 mt of ex-ASEAN 5SP billet was closed by a trader at $595/mt CFR. This is down from last week’s deals for 20,000-30,000 mt in total at $600-605/mt CFR. Approaching the end of this week, buyers in the Philippines have voiced bids at $590-595/mt CFR, versus traders’ ex-ASEAN offers at $600-605/mt CFR mainly.

- At the same time, Chinese billet suppliers have started to be more active in the export market since last week as prices of Chinese origin billet have become more competitive after declines in the local market. According to market sources, early this week a deal for 50,000 mt of ex-China billet was closed at $585-590/mt FOB. Though there has been no final confirmation of this deal, market participants agree that a trader could have taken a position for the future. Nevertheless, by the end of the week, fresh negotiations for ex-China billet have been held at $580/mt FOB, with counterbids at $575/mt FOB.

- ASEAN-based mills, who had rolled over the billet offers last week despite the weak Chinese performance after the holidays, have decided to cut prices finally, seeing no improvement and lower tradable levels from the buyers in the region. The leading Indonesian mill has lowered its offer prices by $20-25/mt from last week’s level to $595-600/mt FOB, while some sources said on Tuesday that it is possible to get even $590/mt FOB from Indonesian and Malaysian BF-based mills, which, however, has not been confirmed as official offers. One offer from Vietnam has been reported at $610/mt FOB. While the lowest level for ex-ASEAN billet from mills has been heard at $580/mt FOB from one Malaysian EAF-based producer, though some sources said that the producer has not been offering officially and that this is the level targeted by buyers.

- This week, Iranian steel billet exports have remained quiet, with both sellers and buyers being acutely skeptical with regard to any positive changes in the market in the near future. One deal for ex-Iran steel billet has been heard this week at $545/mt FOB BIK. The material is reported to be destined to be shipped to the Far East.

- Ex-India billet prices are down an average of $5/mt to $565-575/mt FOB. While private mills have pulled back from concluding deals as expectations of achieving deals at $600/mt FOB have been disappointed, at least one government mill has floated an export tender for 20,000 mt to close later this week and set a new price trend at a lower level. Another steel producer concluded a spot sale of 20,000 mt with an Asian trading firm at $570/mt FOB, down from last week’s deal at $578/mt FOB.