Global View on Billet: Prices stable in Asia, slight support in MENA amid scrap rebound

The global billet market has been rather stable in terms of prices this week, but sentiments have been different from market to market. In Asia, weak seasonal demand and production cuts in China have been keeping prices stable, but with a negative bias, while in the MENA region some slight improvement is possible following the rebound in the scrap segment.

Ex-China billet prices have declined slightly compared to last week, by $2.5/mt on average to $455-465/mt FOB. However, in general, most sellers have not been very aggressive and the decline has mainly been due to lower production costs after the softening of iron ore prices and the first round of local coke price declines proposed this week. Also, the rather stable sentiments have been supported by production cuts. As announced on Thursday, Tangshan mills have been requested to cut capacity utilization by around 20-40 percent. The recent appreciation of the local currency is making exports less advantageous (PBOC official rate $1 = RMB 6.7933).

The leading Indonesian mill has been offering for September shipment at $465/mt FOB, stable from late last week. Though no deals have been reported so far, a level $5/mt lower is assessed as being workable. But the producer has managed to conclude deals for slabs: apart from previously reported sales to India, 30,000 mt of HRC grade slabs have been traded to Italy at $470/mt FOB, while official offers are at $475/mt FOB, also for September shipment.

Large Indian mills have continued to aggressively push billet sales overseas during the past week prompted by local oversupply of semis. Ex-India billet tradable price levels have largely been kept stable at $450-460/mt FOB, but at least two tender-based export sales fetched highest bids of $455-460/mt FOB, buoying up sentiments and triggering expectations of a consolidation. Similarly, an induction furnace (IF) operator is also heard to have closed a spot sale of an undisclosed tonnage at $450-455/mt FOB.

In Turkey, billet trade has been rather slow this week with buyers mainly pushing for lower levels, while mills have been resisting. Moreover, with a slight uptick in import scrap prices, mills have raised their rebar offers and received a firmer ground for avoiding discounts for billet. Local billet stands mainly at $530-540/mt ex-works this week, versus $520-525/mt ex-works in bids. As rebar has rebounded by $5-10/mt, some mills have started offering billet at $550-555/mt ex-works Izmir.

Import offers in Turkey from China stand at $515/mt CFR for September shipments, with no interest seen, while the latest offers from Malaysia have been reported at $525/mt CFR. Ukraine is still out of the market while the indications from Indonesia are at $520/mt CFR. In this situation, Turkish buyers are expected to show interest in billet origins with shorter lead times and, moreover, Iranian material may be favored over Russian billet due to the increased levels of danger facing maritime operations in the Black Sea. 

The SteelOrbis reference price for ex-Russia billet has improved by $5/mt to $465-470/mt FOB Black Sea. The latest offers in Turkey have been at $490-495/mt CFR. The previous deals were reported at $480-485/mt CFR and, with the recent increase in scrap prices, slightly higher prices may become workable for billet as well. Iranian billet prices are at $475-480/mt CFR and $465-470/mt DAP, up $5-10/mt over the past week.

Prices for import billet in Southeast Asia have been rather stable over the past week as demand has been limited, but stability has settled in China and there has been no aggressive offering from most sellers. The only exception has been a new sale rumored from Iran at a low level even despite the current logistical risks. In particular, a contract for Iranian material has been heard at around $460-465/mt CFR Thailand. This price level is below the lowest offers heard last week at $470/mt CFR and higher. However, according to market sources, the billet booked recently will be shipped only in September and both buyers and the seller “are betting that the Strait of Hormuz will be cleared by then”.