Global View on Billet: Sentiments mixed as scrap provides support, but China still weak

There has been no common trend in the global billet market over the past two weeks. In Turkey, the mood has improved, supported by gains in scrap prices, and demand has also been slightly better than in September. However, in Asia, prices have been from stable to softer as there has been no rebound in China and so far the post-holiday demand in the country has not appeared supportive.

There have not been that many changes in Chinese export prices with the reference level still at $430-440/mt FOB, just slightly above $430-435/mt FOB seen on the last day before the holiday, but stable over the past fortnight. Though official offers are stable, the tradable levels are assessed at $425-430/mt FOB at best so far as local demand has not picked up, inventory is higher, and mills’ outputs are improving. The rebound in the local Chinese market is expected mainly for the last part of October, while in the near future the market will still be oversupplied, so prices are unlikely to improve much, while declines are also doubtful amid significantly squeezed margins due to high iron ore prices. 

The Indonesian mill is offering billet at a stable price comparted to last week, at $435/mt FOB for December shipment. Trading has been almost zero.

The import scrap price increase in the most recent deals has supported the mood in the billet segment in Turkey, as well as pushed up local prices for wire rod. In the Turkish domestic market, billet offers have inched up by around $5/mt to $500-510/mt ex-works this week. Some mills, however, are offering at $515/mt ex-works in the Iskenderun area.

China has returned with softer offers after the holiday - at $465-470/mt CFR and, although this level is quite workable versus captive production costs of $505-510/mt based on scrap at $350/mt CFR, some Turkish buyers have preferred to book billet from Malaysia at slightly below $485/mt CFR Iskenderun. Moreover, there are additional volumes offered to the market at around the same price level. Ex-Indonesia offers are assessed at $475/mt CFR, while Ukraine is aiming for $500/mt CFR for December shipment volumes.

A slightly positive mood is observed among Russian and Donbass-based sellers, due to higher scrap prices, but also counting on the advantage of shorter delivery times compared to Asian suppliers. As a result, Russian billet export prices have increased by $5/mt over the past week to $435-440/mt FOB Black Sea and are now as high as $465/mt CFR Turkey. Buyers assume $455-460/mt CFR should be workable for Russian billet, while Donbass material might be sold at $450-455/mt CFR.

In the GCC region, there has been some interest in billet imports. The latest lot of 50,000 mt from China was booked in early October at $457/mt CFR Saudi Arabia for December shipment, with the freight estimated at $35/mt. The most recent billet indications for Saudi Arabia have been set at around $465/mt CFR. Local IF-based billet prices in Saudi Arabia are at around $490-495/mt CPT. In the UAE and Oman, billet offers from Iran are at $445-450/mt CFR, with some bids heard at $440/mt CPT. In the meantime, Oman is offering at $485/mt CPT to UAE buyers.

Large EAF-based Iranian billet suppliers are aiming at $410-415/mt FOB for their billet for November shipments, while the smaller EAF-based and IF-based mills are targeting $380-390/mt FOB, particularly to Turkey.

In Southeast Asia’s import market, the latest offer prices for 5SP billet in the Philippines are at $455-460/mt CFR, but trading is still at a standstill as buyers have been waiting for additional discounts. Buyers’ price ideas for 3SP are below $450/mt CFR, market sources say, while offers from Asian suppliers are rare and this level is possible only from some sanctioned suppliers from Russia or Iran.

Ex-India billet offer prices are unchanged at $430-440/mt FOB, but even stray bids at around $420-425/mt FOB have been considered unviable by local mills, especially after the local market has started to show signs of a rebound. An export tender, which expired this week is heard to have received a highest bid of $415/mt FOB and, though it could not be confirmed whether the bid will be followed up with a contract, most market participants said the price is too low to be viable for any seller.