Global View on Billet: Prices rise accelerates with CIS leading the race

- The uptrend in the global billet market has continued this week, with ex-CIS prices posting the highest increase amid continued demand from Egypt and the shortage of supply after all the latest deals. Other markets in the MENA region have also posted some further increases, though Turkish buyers, for instance, have been mostly focused on local purchases, rather than on imports. In Asia, higher prices have been strongly supported by the continued demand improvement from China with new deals for ex-ASEAN billet done. But at the same time, most Southeast Asian customers have been reluctant to purchase at higher levels.

- CIS-based billet exporters have continued to enjoy lively demand in several destinations, although Egypt is certainly still the main driver. While late last week the tradable level was $615-620/mt FOB Black Sea, on Tuesday this week deals were reported at $620-630/mt FOB. 

And in a couple of separate steps, the actual workable price level increased to $640-645/mt FOB on Friday with at least three deals from different sellers done in this range. This means that the strong market fundamentals - though the scrap, rebar and billet market trends of Turkey have not been supportive - have allowed the CIS-based billet suppliers to increase their deal prices by $25/mt on the average since late last week. 

- Active sales over the past two weeks have resulted in some significant shortage of billet allocations from the CIS and the mills, according to sources, have only one large cargo each to sell for March shipment and some sellers have started to offer for April. Starting from early January, Egyptian buyers purchased around 150,000 mt of billet from Russia and Ukraine and, moreover, demand for another 100,000-150,000 mt of billet is on the table, according to CIS-based suppliers. Given that demand continues, at least another $5-10/mt price increase is foreseen.

- Contrary to Egypt, the import market in Turkey has been mainly silent this week as the higher offers from the CIS suppliers, who have been actively selling to alternative destinations, have not matched buyers’ bids. Turkish customers were seeking to purchase at as low as $640-650/mt CFR early this week and, though later on some levels $5-10/mt higher were considered workable, the CIS mills have been insisting on up to $670-685/mt CFR in offers. Given the limited allocation from the large producers, some demand is expected to be seen in Turkey for small ex-CIS billet lots for prompt shipments. While import activity has been weak, some considerable volumes have been sold in the local market at around $650-665/mt ex-works depending on the region, in deals closed since the end of last week. 

- Demand for imported billet in China has been on the rise this week as lower EAF-based production and rising costs have led to a reduction in local billet sourcing, which has bolstered sentiment in the import segment. A deal for 30,000 mt of 150 mm ex-Indonesia billet was done at $640/mt CFR to China on January 19, up by $10/mt from the previous deals for the same origin done late last week. Apart from this sale, an Indonesian producer sold additional volumes of billet to Taiwan at $642/mt CFR. But these price levels are already no longer available on Thursday and Friday. At the moment, the lowest price that could be found from Indonesia in China is $650/mt CFR. In such a situation, the SteelOrbis reference price for imported billet in China has increased from $625-630/mt CFR last Friday to $640-645/mt CFR, rising by $15/mt for the second week in a row. 

- Though the uptrend has persisted in the Asian billet market this week, Southeast Asia has lost its leading role in terms of tradable prices compared to other countries like China and Taiwan. Rare deals were mainly done at $630-635/mt CFR in the Philippines, but market sources believe that it will hard to achieve anything below $640-645/mt CFR in the near future, as the latest contract for billet from Russia’s Far East region was already at $655/mt CFR to Taiwan. The overall number of offers to Southeast Asia has declined this week, while offer prices have increased to $655/mt CFR. 

- Indian billet exports had witnessed a strong volume surge over the previous week led by restocking demand just ahead of the Lunar New Year holiday in China, and so Indian mills have been trying to push prices up further in the past week. This week, the mills have been targeting $605-610/mt FOB at least, following deals at $595-597/mt FOB last week. A government-run steel mill held a tender for 30,000 mt on January 18. And though the producer said it sold this lot at $609/mt FOB, a number of trading sources said that the highest bid was not above $600/mt FOB. “$609/mt FOB was the price that RINL wanted, but the bidder countered,” an Asian trader said. The SteelOrbis reference price for ex-India billet is at $600/mt FOB, up by $5/mt over the past week from $590-600/mt FOB. 

- A certain increase in buying activity in Asia (in particular, in China), the main destination for ex-Iran material, has encouraged Iranian steel billet exporters to seek higher prices in bookings. A major Iranian producer has sold three cargoes of steel billet, 40,000 mt each, at $553/mt FOB BIK, for shipment at the end of February. In the meantime, another leading Iranian billet producer has decided to take its time, declining firm bids at $550/mt FOB BIK and below, expecting prices to strengthen further. The producer has floated an export tender with a January 24 deadline for 20,000 mt of steel billet. By the end of the previous week, a tender for 30,000 mt of steel billet, for February shipment, had been closed at $554.78/mt FOB.