Global View on Billet: Prices start to slide, future trend to depends on China and raw materials

The global billet market has turned bearish this week, which has been driven by the situation in China, where steel and raw material prices posted declines due to slowdown in demand. Most other suppliers globally have been trying to avoid providing discounts this week, but it seems that the whole market has already been affected by the negative moods and outlook.

The main reason for the declines in China has been weaker futures prices, triggered by a slowdown in local demand. The SteelOrbis reference price for ex-China billet has settled at $470-480/mt FOB, down by $10/mt over the week. Mills have been offering at the higher end of the range, while traders have already dropped prices to $470-475/mt FOB by Friday, feeling that the downtrend may continue. Overall offer volume for Chinese billet in the major outlets has remained stably high and even new rumors about possible control of semis exports have failed to affect the market.

The Indonesian mill has been inactive after the previous sale at $490/mt FOB to a trader for the GCC market last week. Offers have been at $495/mt Fob for September shipment in the middle of the week.

Indian billet suppliers have remained interested in sales in the export market due to still difficult conditions locally. But buyers have become “sensitive” to higher levels. A government-run mill held an export tender for 30,000 mt on May 19. The highest bid in it has been heard at around $470-475/mt FOB, which is below prices in similar tenders earlier in the month which closed at $477-482/mt FOB. RINL expectations were above the $480/mt FOB mark in the new tender. So, by the end of the week, the company opened another auction for 30,000-60,000 mt of billets, trying to find better price realizations. An eastern India-based mill reported a sale of 20,000 at $478/mt FOB, but there has been no confirmation of the details of this deal by the time of publication. A private mill said it sold 20,000 mt for delivery to the Gulf Cooperation Council region at $485/mt FOB, which is somewhat on the highest side in the current conditions, and most market sources agree that the current tradable level is hardly above $475/mt FOB, though most sellers are still targeting $485/mt FOB.

The SE Asian import billet market has obviously turned negative this week as, even though the decline in offers has been gradual, most buyers expect a further drop in the near future. In the Philippines, offers for 5SP 150 mm billet have been heard at $500-502/mt CFR this week, down from $505-510/mt CFR a week ago. But buyers in the Philippines are targeting $490-495/mt CFR for 3SP and 5SP. There has been a drastic fall in activity in other SE Asian countries as well, and no firm negotiations have been heard in Indonesia and Thailand. Some offers from China for 3SP billet have been heard from traders at $495/mt CFR this week; however, even after the decrease this has failed to get any attention from buyers. Some buyers in Thailand aim $470/mt CIF.

In Turkey, the billet trade has been quiet this week considering the weak demand for domestic rebar despite the expected restocking ahead of the holidays. The local billet prices in the Iskenderun region have remained at $555-565/mt ex-works, with no fresh deals reported this week. On the import side, offers have been mainly coming from China at $525-530/mt CFR, with slightly lower levels also possible. However, buyers are expected to seek levels of around $515-520/mt CFR according to the current mood in the rebar and scrap segments. Some regular buyers might be in the market after the holidays, but overall no one expects any excessive demand to emerge. Indonesia and Malaysia are still out of the market, while the latter might offer some allocation in early June. Ukraine also has limited allocation and prefers to concentrate on sales to Europe nowadays.

Russia’s supply volumes are also reportedly not plentiful nowadays, with only small lots available at around $515/mt CFR for June shipments. However, $5/mt discounts are considered possible and some small buyers might book after the holidays. The large supplier is currently out of the market and will be back with July shipment allocation. The SteelOrbis daily reference price for ex-Russia billet remained at $485/mt FOB, unchanged over the week.