Global View on Billet: Stronger China and firm scrap push prices up in most markets

Prices for billets in the major global markets have seen rises this week and the change in trend has become visible as the sentiments in China have improved and scrap prices are rather firm.

The ex-China reference billet price has increased by $12.5/mt on average from the past week to $445-455/mt FOB. Rising prices in the Chinese local market have supported sentiments globally, but has pushed away buyers. The Chinese steel market has been firm with better demand and mills’ margins have reached a four-month high. Also, On February 19, the People’s Bank of China (PBOC) conducted a RMB 538.9 billion ($75 billion) seven-day reverse repo at an interest rate of 1.5 percent, aiming to keep liquidity in the banking system at an adequate level, the bank said. 

ASEAN mills have also been more confident in increasing prices, especially after selling sizable April shipment tonnages. The major Indonesian mill managed to sell over 50,000 mt at $433/mt FOB on last Friday-Monday, while at least one deal was signed at $438/mt FOB on Tuesday. This means that, after cutting offers by $7/mt last week to $438/mt FOB on Friday, the Indonesian mill has managed to attract demand from traders. Moreover, one more deal for April shipment was signed at $440/mt FOB in the middle of the week and offers from Indonesia have reached $445/mt FOB late this week. Indonesian mill still has April shipment allocation, but the pressure is reduced after sales this week. Malaysian mills are targeting $455/mt FOB. 

The gradual uptrend has been seen in the SE Asian import billet market, but most buyers have been staying away from negotiations, especially after some deals were done at lower levels in earlier weeks. A deal for Asian origin 5SP has been reported to the Philippines at $455/mt CFR by a trader. But a number of market sources have said that this deal is an old one done late last week. In the middle of this week, the lowest offers for 5SP have been at $460-465/mt CFR and up to $470/mt CFR by the end of the week. In Indonesia and Thailand, Chinese and Indonesian billets have been offered at $460/mt CFR for 3SP. Also, an offer from Japan for 4SP has been heard at $460/mt CFR to Thailand. No new deals have been reported so far, as most bids have been still at $440-445/mt CFR. Among all origins, ex-Iran offers have been among the lowest. Ex-Iran billet offers for 3SP have been at $445/mt CFR in SE Asia and at $455/mt CFR for 4SP.

Russian billet exporters have been aiming to increase their prices this week, based on firm Turkish scrap prices and also due to the appreciation of the rouble. Most offers to Turkey have been at above $460/mt CFR, versus $450/mt CFR which was workable a week earlier. Moreover, sources have commented that lower levels are possible only for ex-Donbass billet. Still, no deals have been reported as some Turkish buyers have restocked with small volumes in the domestic market, while some large volumes overall had recently been booked from Malaysia at $485/mt CFR on average, SteelOrbis reported.

Asian origin billet has been on offer in Turkey at $478/mt CFR from China, versus $475/mt CFR earlier this week, and at $473-475/mt CFR from Indonesia. Malaysian billet indications have been reported at $485-490/mt CFR, almost in line with the previous week, with no fresh deals reported. Many sources agree that buying from Asia is risky for now since the delivery time for most cargoes is the second half of May at best. In the local billet market in Turkey, prices from sellers in most regions, except Karabuk, have settled at $510-520/mt ex-works and slightly above, while sales from Kardemir were transacted last week at $490/mt and $500/mt ex-works, depending on the grade, SteelOrbis reported.

Iranian billet exports have been quiet recently as mills had traded sufficient volumes previously and currently are not in a position to accept buyers’ low bids. In particular, buyers from the MENA region have been aiming to book billet from Iran at quite low levels of around $380-405/mt FOB, while the latest officially released tender sales price from Iran stood at $420/mt FOB. Some smaller mills are in a position to offer $400-410/mt FOB, and similar levels are available for certain small ready cargoes at ports and for IF billet, but no deals have been reported so far. Some bids from Saudi Arabia have been reported at $430/mt CFR Jeddah, some from Jordan at $435-440/mt CFR, while some Omani buyers have been looking to buy at $400/mt CFR and below. In such market conditions, selling to Asia is considered an opportunity for Iranian billet sellers since the prices for Iranian origin are among the most competitive in the region, at $445/mt CFR for 3SP material, which is around $410-415/mt FOB depending on the tonnage.

The mood among Indian billet exporters has been supported largely based on the optimistic outlook from the rise in the number of inquiries, but deals have failed to work out due to bid-offer disparities and sellers being unwilling to adjust prices as local sales have still offered a better alternative despite a reversal of the recent uptrend. The SteelOrbis reference price for ex-India billet has been corrected down to $430-450/mt FOB, losing $10/mt over the past week, mainly due to lower bids received from customers. An eastern India-based private integrated mill has floated an export tender for 20,000 mt and, although the highest bid received was not confirmed by the seller, the market speculated that it was at around $430-435/mt FOB.

*- the price level represents the latest offers and excludes deals signed early this week at $433/mt FOB, $438/mt FOB and $440/mt FOB.