Global View on Billet: Prices rise gradually everywhere, though demand reduced

Prices in the global billet market have continued to move up this week, as reflected in all major destinations, supported by some limitations of supply in China, higher scrap prices and the rather firm outlook for the near future. However, demand from major buyers has been subdued.

The ex-China billet reference price added $7.5/mt on average since late last week to $435-440/mt FOB, with most offers seen at $435-445/mt FOB by the end of the week. One international trader confirmed that last week the tradable level for ex-China billet was at around $430/mt FOB and lower, with some deals done, but demand slowed down after the recent increase in offers. Lower production and firm raw material prices were among the main reasons for the Chinese price increase. Even though local coke prices posted a first round of declines this week, iron ore is still above $105/mt CFR and Chinese billet exporters believe that steel prices will not retreat in the near term.

Ex-Indonesia billet offers for March settled at $440/mt FOB from Monday this week, up by $8/mt from the offer level seen late last week. The mill managed to sell up to 100,000 mt of billets and at least 50,000 mt of slabs last week. The billet sales price was at $432/mt FOB, mainly for the Turkish market, but a part of the volume was for a trader’s long position. Other ASEAN exporters have remained inactive - there have been no firm offers from Malaysia, while the indicative level for ex-Vietnam billet has been heard at $438-440/mt FOB.

In Southeast Asia, demand has also been subdued with only some deals reported, and mainly done last week. Last week, a major importer in the Philippines was looking for 20,000 mt of 5SP billets and closed a deal at $455-460/mt CFR, according to market sources, which is slightly above the previous contract done at closer to $450/mt CFR, as reported two weeks ago. But most buyers in the Philippines were still assessing the workable level for 5SP billet at not above $450-455/mt CFR. Offers for Chinese 3SP billets were at $452-460/mt CFR in Indonesia, Thailand and Taiwan, slightly higher than $445-450/mt CFR seen last week.

Though overall demand for import billet in Southeast Asia has remained poor, some deals for ex-Iran billet have been reported lately, especially given the high offer prices seen from Chinese and ASEAN exporters. Around 40,000 mt of ex-Iran 5SP billet are reported to have been sold to Indonesia at $450/mt CFR. Considering some extras for 5SP grade, the base 3SP grade price has been assessed at $445/mt CFR in this deal. This means that even sanctioned suppliers have managed to achieve higher prices, as the previous sale for Iranian 3SP billet was done to Thailand at $435-440/mt CFR a week ago.

In Turkey, the currently firm local rebar pricing, which is now standing at $560-595/mt ex-works depending on the region, has triggered not only an indicative increase of export prices for longs, but has supported domestic billet pricing as well. Most of the mills are now offering at $515-530/mt ex-works with the higher end seen in the Marmara region. However, buyers in the Iskenderun region believe $510/mt ex-works levels are reachable for 10,000-20,000 mt lots. Domestic billet is expected to be preferred over most import offers, considering long lead times for Asian billet specifically. China is offering at $472-475/mt CFR for February shipments, up from $465-470/mt CFR seen last week. The billet offers from Indonesia and Malaysia are indicative at $475-477/mt and $490-495/mt CFR for March and February shipments, respectively. Ukraine is in the market with around $500/mt CFR with one supplier offering for February and another for January shipment.

Offers from Russia and Donbass are scarce in Turkey, considering the low interest of buyers, but also the somewhat limited availability. The indicative levels of offers are at $460/mt CFR and, according to some buyers, $455/mt CFR might be accepted by certain suppliers. Still, considering the high local rebar prices, the workable levels for import billet with close delivery dates should be higher than that. However, buyers are resisting negotiations, citing currently extremely slow exports. The SteelOrbis reference price for ex-Russia billet stands at $440/mt FOB, moving up by $2.5/mt on average over the past week.

Ex-India billet prices are quoted in the range of $435-440/mt FOB, compared to $430-440/mt FOB a week ago, but no significant spot deals have been reported as private mills did not pursue the offers submitted, preferring to take advantage of the buoyant local market conditions. Local merchant billet trade prices have gained upward traction amid higher demand from secondary conversion mills and large integrated mills reducing open market sales to maximize internal conversion. This triggered a surge in local billet of INR 900/mt ($10/mt) to INR 39,400/mt ($438/mt) ex-Mumbai.