Global View on Billet: Prices weaken, but hopes for rebound emerge in some markets

- Billet prices in all major markets have weakened this week due to slack demand and falling bids. But in some markets signs of a possible rebound have emerged as suppliers hope for better consumption in October and see an improvement in scrap prices in Turkey.

- Local Chinese billet prices and tradable levels for imports have declined again in China since last week. As a result, most suppliers have not been interested in offering to China. The tradable level for imported billet in China has declined, to $475/mt CFR, versus $490/mt on average last week. The average local billet price in China has slipped by RMB 23/mt ($3/mt) over the past week to RMB 3,755/mt ex-warehouse. Th relatively small decline over the week is connected with increases seen on Thursday and Friday amid higher futures prices.

- Prices for imported billet in Southeast Asia have also posted some declines this week, mainly due to the decline in bids and lower offers for short-position material from traders, which have emerged again. Traders’ pessimism about the near-term situation contrasts with ASEAN region-based mills’ positions, as the latter are mainly either keeping prices stable or are even trying to voice higher offers, hoping that the market will resume a rising trend soon. The most competitive offers from traders have been reported to the Philippines at $540-550/mt CFR and at least one source said that a Chinese trader has been offering at low as $535/mt CFR for 3SP billet, but all participants agree that it was for a short-position sale aimed at “testing the market”. After a sale for ex-Malaysia 5SP billet at $548/mt CFR early last week and IF billet at $540/mt CFR Manila, no fresh deals have been heard. At the same time, in the middle of this week higher offers for ex-Malaysia billets were reported to the Philippines - at $560/mt CFR for 3 SP and $565/mt CFR for 5SP. Most market sources believe that these levels are too high and do not represent the current market situation, at least yet.

- Though many traders have left prices for ex-Iran billet in Thailand and Indonesia unchanged since last week, some of them have started to test the market, asking buyers to give lower bids. New deals for ex-Iran billets are expected with discounts. Taking into account decreasing bids in Asia and bearish sentiments, market sources are anticipating new ex-Iran sales by mills at $450/mt FOB at the highest, versus the previous contract at $455/mt FOB reported last week.

- Iran has remained the main square billet import source for longs producers in the GCC region, taking into account geographical proximity, while sellers from the distant markets are hardly competitive due to high freight rates, particularly for small and medium-sized lots. In the meantime, the prices for ex-Iran billet have been falling in Turkey due to the generally negative market sentiment and low demand in the longs segment. According to sources, the latest offers for ex-Iran square billet in the GCC region have been set at $490-500/mt delivered, down $20/mt from two weeks ago. A small cargo has been traded at the lower end of the range to a rebar producer, while some market players report there has been a sale of 20,000 mt of Iranian billet to the region at close to $480/mt CFR.

- The Turkish billet market may see a price rebound shortly, given the cautiously optimistic mood in the import scrap segment. Although the trend still lacks clarity, some buyers have decided to restock in the domestic market. However, a good number of market players have doubts there will be a solid price increase, taking into account the tough situation in the finished steel segment and mills being squeezed by high costs. A mill in the Iskenderun region has traded around 20,000 mt since the end of last week mainly at $600/mt ex-works, while some deals, according to sources, were closed at around $590/mt ex-works due to some payment arrangements. This week, offers in the region have increased to $620-630/mt ex-works, buyers say. In the Marmara region, domestic offers are at $630-635/mt CPT, SteelOrbis has learned. In addition, local producer Kardemir has closed the billet sales it opened last week at $610-615/mt ex-works, having traded at least 30,000-35,000 mt. In the Izmir region, one billet supplier is back in the market with offers at $620/mt ex-works, which are still considered high under the current market conditions. Turkey’s export prices for billet are at $620/mt FOB and above, and around 10,000 mt is rumoured to have been sold to Morocco at $610/mt FOB.

- This week billet offers from Russian suppliers have been even more limited than previously. Apart from the market uncertainty and closed order books, the announcement of the mobilization in Russia on September 21 has impacted sentiments. Moreover, this will lead to losses of labour, already seen at some mills. “Prices for billet have hit bottom and will start to rebound,” a trader said. For now, the SteelOrbis reference price has remained stable from last week at $505-515/mt FOB Black Sea. Ex-Donbass material has been offered at $540-550/mt CFR depending on the region with no deals concluded. Some suppliers claim they are sold out for October and aim to see $565/mt CFR and above for November tonnages.

- Indian billet exporters' attempts to nudge up prices have been aborted as a fresh wave of pessimism has spread across key regions and buyers in the Gulf and Asia have been seeking alternative cheaper sourcing options. Indian mills have abandoned efforts to maintain offers at the higher levels of $500-510/mt FOB targeted earlier, as bids have fallen sharply to $440-450/mt FOB. As a result, the reference price as an average between offers and bids has slipped by $15/mt over the past week to $470-480/mt FOB.