Global View on Billet: Prices seek clear direction, demand limited as buyers prefer to wait

Billet market pricing has been rather uneven globally this week, while demand has not been showing much recovery, at least for now. Some positivity initially seen in China turned out to be somewhat shaky following the latest decline in futures prices, and so buyers have mainly been waiting to see a clearer market trend before resuming purchases. In Turkey, buyers are additionally cautious as regards bookings of large cargoes given softer scrap prices and declining rebar indications.

China started the week on a relatively positive note in terms of billet pricing with the improvement based on the anticipated stimulus measures to be announced next week. By the end of the week, the mood has worsened slightly due to the decline in futures prices following the slight uptrend early in the current week. Still, the SteelOrbis reference price for ex-China billet has remained stable at $445-455/mt FOB, in line with prices in the previous two weeks. “The Chinese market is better these days. The major mills have no interest in selling billet in the export market mainly as the central government meeting will be held in about a week,” a large Chinese trader said. Ex-Indonesia billet export offers decreased by $5-10/mt to $460/mt FOB early this week, with a limited lot rumored to have been sold to cover a short position. Later, the Indonesian supplier started offering at $455/mt FOB, according to sources. In the meantime, both Vietnam and Malaysia are offering at $470/mt FOB for export, which is currently considered to be the high side.

In Southeast Asia, the uncertainty in China has been impacting the situation in the import billet market. Some positivity in prices seen early in the current week has since been replaced by a certain weakness, particularly since traders have been trying to obtain lower prices before the possible rebound expected after the important government meeting in China due to be held next week. However, the decline in futures prices seen on December 5 has impacted the market mood in a negative way. In particular, in the Philippines, most offers for 5SP 150 mm billet were at $473-477/mt CFR early this week, with a deal rumored at $469/mt CFR, with the workable levels later at even slightly lower levels. Most 3SP billet offers in Southeast Asia were at $465/mt CFR during most of the week, with the workable level assessed at $460/mt CFR following the most recent market developments. The SteelOrbis reference price for import billet in Southeast Asia (both 3SP and 5SP) has settled at $460-468/mt CFR, versus $450-469/mt CFR last week, rising by $4.5/mt on average over the past week.

Indian billet export prices have remained unchanged over the past week due to the relatively silent market conditions, while some sources have assumed that the market has bottomed out. However, buyers hold the opposing idea due to the current situation where supply is higher than demand. The latest levels have been reported at $460-480/mt FOB, versus some bids at $450/mt FOB. According to market sources, at least two eastern India-based integrated mills have pulled back from the market as buyers’ expected price levels are too low for them and even $455/mt FOB has not been accepted in Asia. The reference price for ex-India billet has remained indicatively stable at $450-460/mt FOB. In the Indian domestic market, prices have decreased partially due to the recent slump in rebar prices. The workable levels for domestic billet have lost INR 700/mt ($8/mt) to INR 41,500/mt ($490/mt) ex-Mumbai and are down INR 400/mt ($5/mt) to INR 38,350/mt ($453/mt) ex-Raipur in the central region.

The billet market in Turkey has been quiet this week with no deals reported and in particular mills are trying to refrain from large-sized purchases from Asia. Most of these cargoes are for shipments at the end of January and in February, having rather long lead times. However, there is generally no interest in these, also because the prices are almost in line with captive billet production costs in Turkey. According to the latest scrap prices, Turkish mills are capable of producing billet at a cost of $495-500/mt at most, while Chinese and ASEAN billet is on offer at $480-490/mt CFR and $495-500/mt CFR, respectively. Ex-Ukraine billet is slightly lower at $510/mt CFR, buyers report.

The lowest indications have been coming from Russia with the latest small-volume deals closed at $460/mt CFR or around $440/mt FOB. Some said there was an ex-Donbass sale at $435/mt CFR, but it has been denied by many players since it is far below the cost price. Most of the realistic bids from buyers of material of Russian origin are below $450/mt CFR, with not much response from the suppliers. The SteelOrbis daily reference price has settled at $435-440/mt FOB Black Sea, up $5/mt over the past week.