Global View on Billet: Traders’ many position offers push down prices

- This week, billet prices in the global market have declined with no one among the major exporters avoiding the decreases. The weak Chinese market, which has softened even more this week, and the many position cargoes offered in Asia and in Turkey have put significant pressure on prices. As a result, the mills that are interested in sales have been forced to cut prices. Most sales for position billet cargoes, redirected from China, have been reported in SE Asia.

- Plenty of position cargoes have been available in the Southeast Asian billet market and the latest deals have been reported to Thailand, Indonesia and Taiwan at $660/mt CFR, while last week the lowest level was at $675/mt CFR. At the same time, trading has remained poor to the Philippines, with only some low-priced offers seen there and mills have been not willing to adjust prices below $680/mt CFR. Most market sources believe that prices for billet in Asia will keep sliding, as there is no improvement in China. 

- Falling futures and rebar prices have put further pressure on already-low billet prices in China. The tradable price level in China’s import market has slipped by $10/mt since last week to $630-640/mt CFR. Weakening construction steel demand, even taking into account continued production curbs, is expected to keep the billet market in China inactive for the near future, and so traders will still be trying to redirect remaining cargoes to other outlets, while mills have also been under pressure. 

- The sharp drop in the local rebar market has been reflected in the recent announcement of Shagang Group, which cut its prices for high-speed wire rod, debar-in-coil and rebar by RMB 600/mt ($93.5/mt) for early November. 

- Billet trade and pricing in the Turkish market has also been impacted by the low-priced position cargoes, available for shipment in the short term. As a result, the CIS-based mills, who have been eager to sell, have been forced to cut their prices to $660/mt CFR in sales this week and hardly any price above this level may be considered workable in Turkey at the moment. In the meantime, domestic billet sellers have decided to take a break from active offering, aiming to evaluate business prospects in view of the current scrap and import billet trends. Meanwhile, the situation in the rebar segment remains unfavorable as exports are still scarce and the trade in the local market is affected by the weakening of the lira.

- The reference price for ex-CIS billet from the Black Sea has fallen to $620-650/mt FOB this week, down from $655-660/mt FOB seen late last week. Apart from the Turkish market, where buyers have been asking for $620-630/mt FOB, some demand was reported from Central America early this week with prices at the higher level. A number of producers, from Russia in particular, have decided to stay out of the market, waiting for a better situation later in November and seeing very high rebar prices in their local market. 

- The sharp declines in the billet market in China and buyers in other Asian markets staying away from imports anticipating a further fall in prices have prompted Indian mills to largely withdraw offers or lower prices to push limited volumes overseas. The tradable level for ex-India billet prices from mills are down to $610-620/mt FOB, compared to $620-625/mt FOB a week ago, with the focus on smaller tonnage negotiations to the Gulf. With the freight from India to Asia at around $70/mt, this level corresponds to $680-690/mt CFR, too high for buyers who can buy from trader at $660/mt CFR. A position cargo of 15,000 mt of ex-India billet was sold to Indonesia at $660/mt CFR. 

- Following quite a long absence of any ex-Iran billet trading, a 30,000 mt cargo of ex-Iran steel billet changed hands at $620/mt FOB recently, down $20/mt from previous tenders. The destination has not been confirmed by the time of publication, but any country in Southeast Asia could be the destination.