Global View on Billet: Quick price rises seen in most markets after New Year

Billet prices in all major markets globally have posted rapid rises in the first week of 2023, supported by the previous good sales of mills and somewhat limited allocations, sharp hikes in the scrap segment, and positive expectations for demand to support the current surge. For now, market sources are cautiously optimistic, but since prices have increased so fast, they believe the next deals will bring light to the current market picture.

In Turkey, the higher scrap prices and the increased interest in the domestic origin billet have pushed prices up significantly. Some of the domestic producers managed to sell a total of around 50,000 mt of billet this week at $627-638/mt ex-works, while before the holidays prices stood at around $600-620/mt ex-works. Market sources believe that the demand for domestic billet in Turkey will remain rather high, taking into account that some mills want to avoid active imports due to the issues they are having with import/export licenses. Given minimal finished steel exports, importing billet especially for deliveries in the current quarter is getting risky since no one wants to pay 24 percent import tax. In the import segment, some may prefer dealing for Euro 1 billet, but the allocation of such semis is very limited. Egypt may be another option due to the FTA, but the mills normally do not export billet heavily.

This week, the number of billet offers to Turkey particularly from Russia has been scarce and the expected level for next week may be at $570-590/mt CFR depending on the producer and the volume. The latest offers for the alternative origins have been reported at $595-600/mt CFR from Vietnam and Indonesia, up from $590/mt CFR offered before the holidays. The GCC may have a chance to sell since the suppliers have February shipment in hand, though they are targeting above $600/mt CFR for 20,000-30,000 mt lots. In addition, this week a total of 15,000 mt of non-Russian billet has been booked to two buyers in Turkey at $575/mt CFR as position cargoes for January-February shipments.

In the GCC, some of the large buyers from Saudi Arabia are in the market to purchase and are collecting offers. For now, an ex-Indonesia position cargo has been offered at $587/mt CFR, while no ex-Russia indications have been heard in the market. In the UAE, the offers from Iran have increased by around $20/mt and, according to sources, are at $530-540/mt CPT. Offers from Oman are at $560/mt CPT UAE, while the same level is offered by the domestic producer on ex-works basis. Export billet offers from Kuwait, Qatar and Oman have been mainly reported at $560-565/mt FOB at the end of the week.

The SteelOrbis reference price for ex-Russia billet prices has reached $540-555/mt FOB with the midpoint at $547.5/mt FOB Black Sea, up $27.5/mt over the past week. Though overall offers from Russia have remained limited so far as most suppliers will be staying out of the market until next week, the latest scrap price increases and some deals for imported billet early this week to Turkey have proved that the tradable level for ex-Russia material could be at least $570-590/mt CFR. The reference price does not include ex-Donbass deal price levels ($560/mt CFR early this week) as these trades are illegal and usually are done at discounts. There have also been some rare trades of ex-Belarus billets also at lower than the market prices - below $550/mt CFR early this week, which is considered not to reflect the current market.

The uptrend in the billet market in Asia is expected to gain momentum as a major mill in the region has managed to close its order books for February at the previous asking prices and will target much higher levels for March shipment. In total, one Indonesian producer alone sold 150,000-180,000 mt of billets and slabs over the past week to ten days, out of which 100,000-120,000 mt were billets. A part of the volume was traded to the local market and another part to traders for export shipments. The traded price range has been reported at $540-560/mt FOB, which is in line with the price previously targeted by the seller, but higher than the previous round of sales by mills. After the latest sales, new offers by Dexin Steel for March shipment billets have been heard by a number of traders at $575-590/mt FOB since Wednesday.

In the Southeast Asian import billet market, the reference billet price has increased just slightly over the past week, from $560-567/mt CFR last week to $565-575/mt CFR with the midpoint at $570/mt CFR, as demand has remained slow after the holidays. The last deal for 5SP billet to the Philippines was done last week at $567/mt CFR, but this week traders have started to become more bullish, asking for $585/mt CFR on Wednesday and Thursday, and already $595-600/mt CFR on Friday. These new CFR offers translate to around $560-570/mt FOB, excluding freight.

With their production constrained by restrictions related to gas consumption, Iranian steel billet suppliers have continued to push their offers up further. Furthermore, the bullish stance of other global billet suppliers has encouraged Iranian exporters to follow the same trend more decisively. Ex-Iran reference billet prices have hit $490-505/mt FOB this week, with the low end confirmed in a deal, while the high end reflects the targets of the mills due to short supply. Ex-Iran billet offers are said to have reached $505/mt FOB BIK levels and in some cases even higher. “Due to the shortage of natural gas, we can barely produce anything. But some companies which are linked to the government can use gas,” a source at a mill commented.

Higher prices have also been reported as having been fixed in deals to East Asia, to Taiwan in particular. So, taking into account that local billet price rises in China have been small, the gap between offers and tradable levels in the import market in China has widened, making the possibility of resuming import trading any time soon very unlikely. A Russian mill has been in the market with 20,000 mt of billets, offering at $550/mt CFR to Taiwan, and at least some of these volumes have been traded for March shipment at this level. Market sources believe that this was vanadium-added material. In the middle of December, offers from Russia to Taiwan were at $530/mt CFR and customers were assessing this level as too high at that time. Buyers have had no other choice but to accept higher prices for imported billet from Russia, as other suppliers have already increased prices even more. For instance, offers for ex-Iran billet in Southeast Asia and East Asia have increased to $540-555/mt CFR.

Ex-India billet trade activity has showed signs of a definite revival led by local government-run mills and, though the pace of the uptrend of price levels was below the expectations of sellers, buyers were slightly more aggressive in concluding deals. The reference price for ex-India billet has settled in the range of $510-520/mt FOB, up from the previous week’s levels of $485-505/mt FOB. Though this is still lower than the levels expected by producers at $530-540/mt FOB, the resurgence of buying interest has been taken as a positive. A government-run mill which floated an export tender for 30,000 mt to close later this week also concluded a trade for 15,000 mt on spot basis at $510/mt FOB for the Gulf market. Another government mill reported a trade at $520/mt FOB and, while neither the tonnage nor destination could be confirmed, some in trade circles speculated Turkey as the destination. An Odisha-based integrated mill reported a sale contract with an agency in Hong Kong for 30,000 mt at around $510/mt FOB or slightly above, the sources said.