Global View on Billet: Strong uptrend continues amid better demand, rising costs

The global billet market has been performing strongly this week again as the uptrend has become clear in Asia after China returned from its holiday. In addition to increased negotiations in Asia, buyers from other parts of the world - North Africa and Latin America in particular - have been interested in purchases, while overall supply volumes have been limited. The bullishness in the billet market has been supported by rising costs as scrap prices everywhere have been on the rise this week. Expectations for the coming week are mainly positive, but sources believe that buyers need to accept the current offers first before suppliers will try to push prices up further.

- Ex-CIS billet prices have hit a new high this week at $680-695/mt FOB, mainly amid demand seen not only from Egypt, as over the past few weeks, but also from other African countries, Europe and Latin America. A contract for 30,000 mt of ex-Ukraine billet has been done at $710/mt CFR, which translates to $685/mt FOB, but if the freight rates go up more it may come down slightly. At least three large mills have confirmed that they are seeing the real workable price at around $685-690/mt FOB. Inquiries for 5,000-20,000 mt of billet have been heard from Libya, Morocco, Tunisia and East Africa. Also, a few Latin American countries have been in negotiations for ex-CIS material with offers all above $690/mt FOB. Market sources do not exclude that prices could hit $700/mt FOB in the near future if demand continues, while there are no expectations for increase in supply.

- Billet market activity in Turkey has been insufficient this week, especially in the import segment. While the CIS mills have been aiming to sell at up to $710-720/mt CFR for large lots for April shipments, small prompt shipment cargoes are expected to be offered soon at $690/mt CFR. The buyers have been cautious this week, partly as they restocked earlier for both domestic and import billet. However, soon they may resume bookings, taking into account the uptrend in scrap, stronger rebar prices and the solid positions of the CIS-based billet exporters.

- Negotiations with Chinese billet importers have resumed this week, while prices have recovered gradually, though not as fast as expected by suppliers. Nevertheless, on Friday, February 11, the market has actively discussed a new deal for ex-Indonesia billet done to a trader for future sale into the Chinese market, confirming the good outlook in the market for the coming weeks. Numerous market sources confirmed that one cargo of 30,000 mt of ex-Indonesia 3SP 150 mm billet has been sold to a trader recently. According to sources, the contract was at $696/mt CFR and the trader will decide later on where to ship the material - to China or Taiwan. The average ex-warehouse price for billet in China has been at RMB 4,815/mt on Friday, translating to just $668/mt, according to SteelOrbis’ data, after a daily increase of RMB 50/mt ($8/mt). But as the outlook is still very positive, traders have been considering taking positions for future sales. LINK

- Billet trading in the Southeast Asian market has been poor this week as the majority of offers have increased to above $700/mt CFR and buyers in the region have been evaluating further developments, not being ready yet to accept rapid sharp hikes. Most offers have been at $700-715/mt CFR and the tradable level has increased to $680-690/mt CFR with most market players believing that it will be hard for customers to find any volume at below $690/mt CFR. The latest deal in the region was for ex-Iran billet by a trader to Thailand at $640/mt CFR for 40,000 mt, done late last week, while new offers are all expected to be above $660/mt CFR.

- As reported earlier this week, two bookings for ex-Iran billet done by mills were at $587-590/mt FOB with the final destinations are heard to be MENA countries, rising visibly from $570-575/mt FOB seen a week before. But by the end of this week, offers have already increased to $600/mt FOB at the lowest. A contract for 30,000 mt of 3SP modified billet (which includes $10-15/mt extras) has been heard at $615/mt FOB. According to sources, restrictions on gas usage in Iran may be eased next week.

- The Indian government mills, which have been the most aggressive in pushing volumes of semis overseas, have increased their targeted price levels to $670/mt FOB minimum, while some of them are expecting $680-690/mt FOB in the near future, versus targets of $650-660/mt FOB late last week. This new level is too high for buyers at the moment and the tradable price level was at $640-650/mt FOB during most of this week. But traders may be interested in buying for India for future sales, and so prices still have some room to increase.