Global View on Billet: Tentative rebound seen amid rises from China, prices still slide in MENA

Global billet prices have rebounded slightly this week, based on rises in China ahead of the long holiday. However, unlike the situation in Asia, prices in the MENA region have been under pressure due to the continuing downtrend in the scrap segment.

The ex-China billet reference price has moved up by $10/mt in total over the past week to $435-445/mt FOB, though most sources believe that the tradable level is still lower, at $430-435/mt FOB at the highest. Next week, Chinese market players are going to start to exit the market ahead of the long holiday, so suppliers hiked local prices in advance and are expecting that the Chinese government will announce more supportive measures.

GCC-based buyers have been among the most active in negotiations for Chinese billet. According to market sources, last week three cargoes of 50,000 mt each were sold from China at $467-468/mt CFR to Saudi Arabian buyers for end of March-early April delivery. These deals have not been confirmed on FOB basis, though market sources assess the freight to two major Saudi Arabian ports at around $40/mt, meaning traders have already got or will target below $427-428/mt on FOB basis. In late December, 100,000 mt of Chinese billet were sold to Saudi Arabia also at around $470/mt CFR.

The leading Indonesian mill increased offers for March shipment by $3/mt early in the week and by another $4/mt on Thursday to $437/mt FOB. Last week, some volumes of up to 30,000 mt were traded at $430/mt FOB. One of the main Malaysian mills, which was offering at $445/mt FOB for early February shipment last week, is heard to have sold a cargo of 44,000 mt to a trader, and market sources believe that the final price level was below $440/mt FOB. This volume is already heard to have been sold to end-users in Turkey. But, with Chinese prices going up, the next offers from Malaysia are expected at $445/mt FOB.

The SteelOrbis reference price for import billet in Southeast Asia has settled at $440-460/mt CFR, moving up by $5/mt over the past week. Most offers are above $450/mt CFR, but buyers’ price ideas are still low, so the workable market price has failed to indicate additional movement, at least for now. In particular, in the Philippines offers for 5SP billet from traders have been at $450/mt CFR at the lowest, according to some sources, while a few sources have already reported offers at as high as $458-463/mt CFR Manila, but there have been no deals reported after that signed at $445-450/mt CFR a week ago. Offers for 3SP billet (mainly Chinese origin) have been heard at $455/mt CFR or so to Indonesia and Thailand. One deal was rumored last week at $435/mt CFR to Thailand, but for an unknown origin. There could be some demand from Indonesia with the latest bids for 3SP at $440/mt CFR.

Billet prices in Turkey have slid to $450-475/mt CFR this week depending on the origin, while not much has been happening in terms of demand. Turkish mills are still mostly finding scrap imports to be a better option, given the particularly long lead times for most Asian cargoes. In the meantime, availability of billet with nearer shipment dates is not plentiful since Ukraine is basically not offering and Algeria is also currently out of the market. According to sources, some re-rolling companies have booked lots from Malaysia for February shipment at $470-475/mt CFR, which were earlier offered at $480/mt CFR. Chinese billet offers have rebounded slightly to $470/mt CFR with no takers, while Indonesian billet has also been evaluated at the same levels. Most Asian cargoes are for March shipments, while import scrap is currently being booked for February, which is preferred by Turkish mills. In addition, many buyers had restocked from domestic producer Kardemir earlier, while some have booked from Russia.

The latest deals from Russia have been reported at slightly below $450/mt CFR, while the new offers are at $450-455/mt CFR, with the potential to decrease further. However, prices from Russia may hold at relatively high levels compared to China, given the short lead time and the possibility of booking small volumes. The SteelOrbis daily reference price for ex-Russia billet is now $430/mt FOB, down $5/mt over the past week.

Though sentiments in the local Indian billet market have been rather weak this week, the mood in the international market has improved and more active negotiations have been seen with Indian sellers. However, despite the rise in the number of inquiries, deals have been limited due to the continuing gap between bids and offers. The Indian billet reference price has indicatively moved down by $10/mt on average over the past week to $440-460/mt FOB, where the higher end of the range still reflects large mills’ target levels. Some negotiations in the Middle East, in the UAE and Qatar in particular, have been heard at $440-445/mt FOB. Most other buyers are still bidding lower, at $430-435/mt FOB at the highest.