Global View on Billet: Prices stable at previous low levels, no support from cost side

The global billet market has been mainly stable in terms of prices this week since, even though the overall mood in June has been negative, there have been no further declines in the main raw material prices and so no support for billet exporters.

The SteelOrbis reference price for Chinese billet is stable at $420-430/mt FOB, with most offers reported at $425/mt FOB. Iron ore port inventories have started to climb again, but iron ore prices are up slightly week on week. Also, after the start of reductions in coke and coking coal production, the prices of these products may also stabilize for a short period of time. In scrap, prices have even inched up in Turkey. The market is stuck and the uncertainty cause by war in the Middle East has raised more concerns. Even though Chinese prices have been stable and are still the most attractive globally, there have been limited deals so far.

Official billet offers on FOB basis from Indonesia have been at $430/mt FOB for October shipment, stable since early this week, but up slightly from $427/mt FOB, which the mill offered previously for September shipment. Trading has been very slow and, even though the Indonesian mill has started to offer for October shipment, this does not mean that there were active sales of billets earlier. There is talk that the Indonesian mill did not sell billets, but switched to make more slabs for HRC, which are selling at better prices.

After the increase in import billet prices in Southeast Asia seen last week, only some buyers have accepted the new price levels, while most importers purchased enough material earlier in June at lower prices. Around 10,000-20,000 mt of 3SP Chinese billet were traded to Thailand at $440/mt CFR early this week, which is in line with the offers seen since last week, but up by $5-10/mt from the previous deals for this grade seen in Southeast Asia in the first half of June. In the Philippines, most offers for 5SP billet have been at $450/mt CFR, almost stable from last week. But “it is really quiet so far. The price increased, but the main thing is that buyers are not in need,” an international trader said. Two weeks ago, buyers in the Philippines bought Chinese and Russian 5SP billet at $435-440/mt CFR.

In Turkey, domestic billet prices are at $495-505/mt ex-works depending on the region with scarce deals closed at the lower end of the price range, but overall demand is not so strong. Rebar trade has been rather slow lately, which is not encouraging re-rollers to deal for semis. In the import segment, preference is given to material with closer lead times and so most ex-Asia cargoes are currently out of the game. According to sources, one vessel from China for July shipment was booked at $450/mt CFR or slightly lower. In addition, after a long break, from Algeria an 30,000 mt cargo has been sold at $452/mt FOB for prompt shipment, with the estimated freight to Turkey at $20-22/mt. Currently, most offers from China are at $452-455/mt CFR for August and September shipments, while Indonesia is already offering October production at $430/mt FOB. Malaysia is in the market with $490/mt CFR for 150 mm billet and for end-of-August shipment. Ukraine is also in the market with both mills offering at $490/mt CFR for August shipments and are expected to sell some cargoes shortly with the advantage of a short sailing time.

Furthermore, Turkey also booked small lots from Russia and Donbass, at $450-453/mt CFR and $445-450/mt CFR, respectively, for prompt deliveries. The SteelOrbis daily reference price for ex-Russia billet to be shipped from the Black Sea is at $425-433/mt FOB, slightly down over the past week.

Iranian billet exports have been quiet lately due to the attacks by Israel and the US and following threats by Iran to close the Strait of Hormuz. Taking into account problems with internet connections, port operations and several more issues, most Iranian mills have been inactive in the billet trade with hardly any tenders seen. The export price has remained indicative at $410-420/mt FOB for several weeks now, while it could increase for GCC buyers if Iran indeed closes or restricts passage through the strait.

Ex-India billet prices are stable at $415-425/mt FOB, with sellers from large mills taking the cue of stability seen in the market for semis in China, prompting optimism that the market may have bottomed out in the current cycle. However, buyers have not shared this view, with some of them pointing out the complete silence of business activity following the submission of offers to the UAE and Saudi Arabia, indicating that the situation in the Middle East remains uncertain both in terms of prices as well as deliveries following the Iran-Israel conflict, which has yet to be fully resolved, the sources said.