Global View on Billet: Shaky uptrend seen in major markets

- The bearish trend seen in a number of markets such as Turkey and Russia has started to reverse this week amid the scrap price rebound and better expectations. Moreover, cautious optimism has continued to prevail in Asia, even though sources are closely watching futures price fluctuations in China and do not see much improvement in fundamentals. China is also expected to resume billet imports in the short term, which is a positive sign. The overall outlook for the next week is positive.

- Early this week, a few ex-Russia billet transactions were disclosed in the market in Turkey with a price decrease compared to late July. One seller traded a total of 10,000 mt at $550-555/mt CFR, while another 20,000 mt were rumoured to have been transacted at $523/mt CFR Marmara. In addition, many market players reported $535-540/mt CFR levels have also been offered and negotiated. In the meantime, in the Turkish domestic market Kardemir sold 26,000 mt of billet at $570-575/mt CFR. 

- But closer to the end of the week, there have been higher scrap deals reported to the market, which have strengthened the mood among Turkish mills, who have started to increase their longs prices. In this situation, the few billet sellers who had been offering and selling to Turkey lately have decided to make a move, believing the workable import billet prices will improve next week. Generally, it is believed that no offers below $570/mt CFR will be available, while some think sellers’ targeted prices may climb to $600/mt CFR. The ex-Russia billet reference price has been at the indicative level of $510/mt FOB Black Sea, improving by $7.5/mt from the average $502.5/mt FOB seen during most of the week, but it is still slightly below last week. As soon as suppliers announce new firm offers, prices will move up further. 

- The optimism over the billet price trend has not been seen everywhere. Slow domestic business for rebar and wire rod in the GCC region, but mainly in the UAE and Oman, have continued to put pressure on workable square billet offers. The billet prices in the UAE have decreased over the same period by $20/mt for ex-Iran material to $530/mt CFR and by $10/mt for ex-Oman and ex-Bahrain lots to $560/mt CPT. Moreover, some buyers have been saying that another $10/mt discount may be possible from Iran.

- The tradable price level for import billet in China has hit and exceeded $500/mt CFR, following gains in the local market and better expectations. Moreover, traders have started to book billet from abroad in positions, signaling expectations for further hikes in prices and the resumption of demand for imported billet. SteelOrbis’ tradable level for imported billet in China has settled at SteelOrbis at $500-510/mt CFR this week, up by $10-20/mt from late last week. But after the fall in futures prices on Thursday, sentiment has cooled down a bit.

 One of the major Iranian mills has managed to close a 30,000 mt billet tender at $460/mt FOB with the sales destination said to be China. Adding the freight to China, this price translates to $520/mt CFR or slightly above. This cargo is expected to be sold later by a trader to China as for now this level is too high for customers. In addition, at least one cargo of 30,000 mt also of ex-Iran billet has been traded at $505/mt CFR China. 

- - With the outlook regarding developments in the global steel market remaining mixed, the major customers for ex-Iran steel billet have continued to push prices down, aiming to secure themselves from potential losses in the future. According to a few sources, this week most bids for ex-Iran steel billet have been voiced at $430-440/mt FOB, down $25-30/mt from prices valid a week ago. This week, a major Iranian steel mill has managed to sell 30,000 mt of 150 mm 3SP steel billet at $460/mt FOB, for shipment at the end of September. Another sale of 40,000 mt of ex-Iran billet has been heard this week at $450/mt FOB, with the material destined to be shipped to the UAE. 

- A Malaysian steel mill is reported to have sold a cargo of billets to a trader at $485-490/mt FOB last week as demand was quite low in the month of July. But since the sentiment in China has improved and as pressure from unsold volumes has diminished somewhat, offers from some mills from the ASEAN region have increased to $520-530/mt FOB. 

- Prices for billet in Southeast Asia, especially from the major regional ASEAN mills, have increased starting from the beginning of this week, though most customers are skeptical that they will be fixed in deals, given the slackness of consumption. Moreover, there are still low offers for IF billets from Thailand at $510/mt CFR and ex-Iran offers from traders at $520/mt CFR, and so buyers still have cheaper options and believe that the recent increase will be short-lived. Traders and some mills have been offering ex-ASEAN EAF/BOF billet to the Philippines at $540-550/mt CFR minimum, with the lower end of the range corresponding to 3SP billets only. But bids have been at $530/mt CFR at the highest late this week.

- Sentiments among Indian billet exporters have remained bearish during the past week, but the easing of the decline in prices and some improvements in the local market were taken to be positives. Ex-India billet prices have been at $480-510/mt FOB, with the upper end of the range sliding by $10/mt over the past week. There has been a billet tender from a major state-run mill, in which the seller expected a bid of $510/mt FOB, sources said. However, there have been no confirmed reports that the tender has been closed, taking into account that this level is too high for the Southeast Asian market, where the reference price is at $530-540/mt CFR, while China could pay only $500-510/mt CFR.