Global View on Billet: Prices show small declines, bearish outlook strengthens

This week has been characterized by a negative note in all major billet markets globally, with prices posting gradual declines. Major sellers like Russia, India, and Iran have been under pressure from slow demand and negative sentiments in the scrap segment. And next week will hardly bring any improvement, as the main outlook for the Asian market is also bearish, even though this week it has been at a standstill due to the Lunar New Year holiday.

Billet suppliers from the Black Sea region are currently facing a weak market, with the main buyers, namely, Turkey and Egypt, holding back their purchases. The latest offers from a mill in Donbass, the Ukrainian territory temporarily occupied by Russian troops, have been reported at slightly above $520/mt FOB, but this level is no longer considered as reflecting the market conditions, and the tradable level is at $510/mt FOB at the moment. Some Russian mills have also been trying to keep offers at $520/mt FOB Black Sea, but the highest possible in negotiations is heard at $515/mt FOB. As for Turkey, the evaluated workable levels for ex-Russia billet have slid by $5-15/mt over the past week to $530-540/mt CFR, which translates to $505-515/mt FOB for small lots. In Egypt, traders, who are selling ex-Russia billet, have cut offers from the high $565-575/mt CFR levels reported last week to $560/mt CFR, but this level has also been unworkable for buyers. As a result, the SteelOrbsi reference price for ex-Russia billet has declined by $5.5/mt over the past week to $510-517/mt FOB Black Sea.

The Turkish domestic billet market has failed to improve much, while supply in certain regions has remained limited. The integrated producer Kardemir has announced billet sales at $580/mt ex-works, for S235JR grade only this time, down $5/mt over the past two weeks. By the time of publication, the producer has concluded deals for 10,500 mt of billet. In other regions of Turkey, the billet price range is mainly estimated at $590-595/mt ex-works with no large deals reported. In the meantime, rebar prices have weakened slightly for export and in the domestic market the mills are having some trouble in their efforts to spur buying. Some buyers share the view that next week domestic billet prices will fall to $570-575/mt ex-works.

There have been a limited number of import billet offers in Turkey for non-Russia/Donbass billet. The absence of China during the holiday period has basically halted the billet offerings from Asia, including those from Malaysia and Indonesia. Both are indicatively estimated to be available at $560-565/mt CFR at present and maybe at levels $5/mt higher for a shorter lead time. An ex-Algeria position cargo is still on offer from a trader at $560-565/mt CFR for early March shipment. A similar level has been voiced for one ex-Ukraine cargo offered to Turkey.

The Asian billet market has remained silent this week amid the absence of Chinese traders and mills due to the Lunar New Year holiday and days off work in other countries, like Indonesia where presidential elections took place on February 14. Market sources are waiting for new prices from the major mills in the ASEAN region on February 16-20, with a few market sources voicing expectations at $520/mt FOB in offers, down from official offers at $525-530/mt FOB before the holiday. Also, international traders have already said that they will target $510-515/mt FOB in new deals. The main Indonesian mill and one Malaysian seller have some small share of allocations for late March shipment unsold, while new offers will all be for April shipment.

Offers for imported billet in the Southeast Asian market have been limited this week as well. However, a large number of local mills and traders believe that next week will bring a price decline of about $5-10/mt. Offers from international traders for open origin 5SP BF billet have been reported at $545/mt CFR Manila this week, but negotiations have been halted, while next week $535/mt CFR will be a good starting point for offers, according to sources. There have been no reports about new offers for IF billet, but a few buyers said that the tradable level should not be above the deal prices seen in January - $522-527/mt CFR.

More Indian sellers have been attempting to push sales overseas amid the current domestic slump, but deal prices have remained below expectations in line with negative sentiments in the Middle East and Southeast Asia and the impact of the holiday period in China. The lowest offers from the integrated mills have been in the range of $515-520/mt FOB, unchanged from earlier weeks, but actual deals (for IF billets mainly) have been reported in the range of $500-505/mt FOB, while bids for BOF billets have been at $510/mt FOB at the highest. So, the price range for ex-India billet has settled at $500-510/mt FOB with the lower end of the range losing $5/mt over the past week.