Global View on Billet: Prices still fall, but pace of decline slows down

The bearishness in the global billet market has continued despite expectations of some stabilization as the falling scrap market and the still weak Chinese market have been driving sentiments. The pace of the decline in billet prices has been slower than last week, but the outlook is still poor, at least for next week.

Billet prices in Turkey, which had been quite low in the previous week, are now under additional pressure from lower scrap prices. Since import scrap prices are now at $335-348/mt CFR for HMS I/II 80:20, down from around $350/mt CFR seen earlier in an ex-St. Petersburg deal, the production costs for billet in Turkey are now evaluated at closer to $510-520/mt as per the average scrap cost for May production. In the domestic market, the lack of plentiful supply has restrained the expected steep drop in billet prices, which are now at $500-515/mt ex-works. 

In the import segment, the current evaluation for ex-China and ex-Indonesia billet in the Turkish market is at $458-465/mt CFR, almost in line with last week, with no fresh deals heard. The latest total of up to 100,000 mt was sold earlier at $457-460/mt CFR from China, as SteelOrbis reported.

Offers for ex-Russia billet to Turkey have been reported at $460/mt CFR Turkey’s Black Sea region, translating to $440/mt FOB, which is a sharp fall from mills’ targeted levels of $460/mt FOB last week. Moreover, sources reported that small volumes of up to 5,000 mt would be traded at $455/mt CFR Zonguldak at present. At the same time, Russian billet exporters are still inactive due to the exchange rate fluctuations. In particular, this week the exchange rate has reached $1 = RUB 82 on April 17, from as high as $1 = RUB 86 last week.

The ex-China billet reference price has been stable at $420-430/mt FOB, in line with the latest offers, but the tradable level has been lower - at $410-420/mt FOB, with some deals signed at $415/mt FOB. Most deals are now in short positions done by traders to end-users, as traders will get below $420/mt FOB in the current market. In addition to the impact of the trade war, the market has been impacted by high production in China. In March, China’s crude steel output totaled 92.84 million mt, increasing by 4.6 percent year on year. Moreover, in early April (April 1-10), the average aggregate daily crude steel output of large and medium-sized steel enterprises - all CISA members - increased by 3.4 percent compared to late March. At the same time, some analysts have also started to believe that the Chinese government may postpone new stimulus measures, considering the rather positive economic data for the first quarter of 2025.

The major Indonesian mill cut its official billet offers by $5/mt on Wednesday and $2/mt both on Thursday and Friday, to $426/mt FOB. The exporter has been looking for sales to the Middle East, and Turkey, but has failed so far.

In Southeast Asia’s import billet market, a deal for ex-China 5SP 150 mm billet was reported at $440/mt CFR early this week, down by $5/mt compared to the level discussed late last week. With freight at $20-25/mt, the FOB price is assessed at slightly below $420/mt. Also, some tonnage of Chinese 3SP billet is heard to have been sold at $435-440/mt CFR Bangkok "to cut rising inventories," a Chinese source said.

Iran’s billet export activity has been weak recently with no fresh deals reported. Some negotiations with buyers are underway, but the price ideas of buyers and sellers are quite different. On the export side, while Iranian mills are aiming to sell at $420/mt FOB, the price idea of buyers is at $410/mt FOB and lower as a result of the global downward movement in the scrap and billet segments. Some ready cargoes of EAF-origin billet are said to be available at $410-415/mt FOB BIK, while the price levels for IF billet are at $370-380/mt ex-works. “The local market has decreased and demand is weak. Buyers are waiting for the results of the negotiation between the US and Iran,” a trader told SteelOrbis.

The reference Indian billet price in the export market has remained stable over the past week at $420/mt FOB. Sellers’ price ideas have been heard at $420-435/mt FOB, but mills have not been submitting official offers largely because even aggressive pricing would not be able to drive sales overseas at a time of negative sentiments amid trade wars and buyers continuously expecting deals at even lower prices. Meanwhile, in the local market, despite weaker trends emerging in long products, the movement of semis has remained positive with some regional producers dropping prices marginally to increase sales volumes.

*- official prices by the end of the week, some deals done at lower level around $415/mt FOB in the middle of the week