Global View on Billet: Trading activity improves, except in Asian markets

Prices for billets have been still constrained this week in the biggest markets with only some slight increases seen in Turkey and in markets close to the country. Some leading exporters have been more willing to sell and have had no other option but to offer attractive prices to stimulate buying. At the same time, customers’ overall interest in purchases has been better, though mainly in the MENA region, while activity in the Asian market has been poor.

The import billet market in Turkey has firmed up this week and the most aggressive import offers seem to have been withdrawn. Previously, the workable level was at $500-505/mt CFR for small lots and at $515/mt CFR for medium-sized orders. This week, most expectations were that Russia would offer at a minimum of $520-525/mt CFR and up to $530/mt CFR, at least from most of the regular suppliers. By the end of the week, the upward expectations have strengthened since the mood is now supported by rising scrap prices. In the local billet market in Turkey, there were sales at $550-560/mt ex-works in the Iskenderun region, while in the Marmara region offers were reported at $560-565/mt CPT. Next week, some higher offers are expected and, in particular, Kardemir is expected to open its billet sales with a price increase of at least $10-15/mt.

Some deals for medium lots of Russian billets have also been heard this week. One deal for ex-Russia billet from Novorossiysk port has been reported at $515/mt CFR Bartin. Market sources believe it was done early this week at the latest, as now bids are already at $515-520/mt CFR for small volumes. A large Russian mill is already offering at $530/mt CFR this week to Turkey for end of December-January shipment. However, offer volumes from suppliers shipping from Rostov and Taganrog have been limited due to the lack of vessels and bad weather. The SteelOrbis reference price for ex-Russia billet has increased by $5/mt on average to $485/mt FOB Black Sea.

While the supply volumes from Russia have been limited in the past weeks and ex-Turkey prices are mainly unworkable for buyers due to high costs and falling longs prices in the main billet consuming markets, Algeria seems to start becoming the next best option as a sustainable supplier of billets to the Mediterranean region. In the past week, Algerian Qatari Steel has traded 150,000 of billet for export to traders at $501-510/mt FOB for most of the deals and at $517/mt FOB for the latest 30,000 mt sale, which was closed this week. The current price of AQS for billet is $510/mt FOB for December shipments, but the workable level may increase, given the uptrend is the scrap segment and the generally better mood in the segment. Overall, if AQS is be able to sustain regular billet supply volumes, its business is likely to continue since Algeria is the only supplier of “clean” origin left now in the regional market of Europe, Turkey and North Africa, and it can also supply with a shorter lead time.

Iranian steel billet exporters have preferred to remain flexible in negotiations. SteelOrbis has heard a few sales of ex-Iran steel billet at prices below the levels in the previous tenders. In particular, Iranian steel mill Sirjan is reported to have sold a 30,000 mt cargo of steel billet at $442/mt FOB. Meanwhile, a 20,000 mt cargo of steel billet produced by another Iranian steel mill has been sold at $440/mt FOB. A major Iranian steel exporter has managed to get $445/mt FOB in its sales of small tonnages (5,000-10,000 mt) to the GCC region.

Indian mills have increased billet export offer volumes over the past few days, seeing inventory build-ups and a surplus in the local market. Among the stray deals over the past week, a private mill has reported a trade with an Asian buyer for 20,000 mt at around $475/mt FOB, down from the tradable level at $480-490/mt FOB last week. This week, the reference price has settled at $475-480/mt FOB. Despite continued weak buying interest in Asia, a higher number of Indian mills have been present in the market with high-volume offers. Since early this week, a government-run mill has put up export tenders aggregating 50,000 mt of prime billet. Another eastern India-based mill has also floated an offer for 30,000 mt. All the offers are scheduled to close by next week, the sources said.

At the same time, in the Asian import market, there has been no significant improvement in demand with only one deal to Taiwan heard. China’s local and export billet prices have posted just minimal changes over the past week and inactivity has prevailed in terms of trading. China has also remained out of the import market with prices too low for most suppliers, even those from Russia, who still can give the lowest prices in the region. The Russian producer has been still focused on negotiations with Taiwan. According to sources, a deal for vanadium-added billet from the largest mill shipping from Russia’s Far East region has been done to Taiwan at $495/mt CFR. Meanwhile, the lowest possible price for other origins - from a trader for ex-Indonesia billet - has been heard at $505/mt CFR Taiwan.

Though prices for imported billets posted some increases in Southeast Asia last week, this week sentiments have worsened again. Some first signs of a weakening of the market have emerged with a few traders’ offers at lower levels, in short positions in particular. The SteelOrbis reference price for imported billet in Southeast Asia has moved down just slightly by $2.5/mt on average to $505-520/mt CFR, with the midpoint at $512.5/mt CFR. Though ex-Malaysia 5SP billets are still available in the Philippines at $520/mt CFR for late December-early January shipment, some lower prices for 3SP billets have been seen in the market. An offer for ex-Vietnam IF billets has been reported at $500-505/mt CFR, slightly down from $505/mt CFR last week.