Global View on Billet: Trend fails to settle with demand being depressed

There has been no common trend in the global billet market this week with prices at major outlets fluctuating in the limited range. No big changes in China and rather stable scrap in Turkey have added to the sentiments in the billet segment. Nevertheless, overall market conditions have remained weak with demand being depressed.

The situation in the Asian billet export market has been rather stable since last week with only limited positive changes seen in China. The SteelOrbis reference price for ex-China 3SP billet has been settled at $420-430/mt FOB with the midpoint at $425/mt FOB, which is $2.5/mt higher than late last week. On Monday, steel futures in China improved on news of some lower crude steel production in May – down by 6.9 percent year-on-year, but in general fundamentals have not changed much and rainy weather is still impacting demand. Most offers for Chinese billets have been closer to $425-430/mt FOB and some Chinese traders have voiced even $432/mt FOB in offers. However, in deals exporters are unlikely to achieve even $420-425/mt FOB, market sources believe. 

An official offer for ex-Indonesia billet has remained stable at $427/mt FOB for September shipment and no new deals have been reported after a sale at $425/mt FOB. Slab price from Indonesia has been at similar level of $427/mt FOB, while wire rod offers have declined by $5/mt to $490/mt FOB.

A few deals at low prices have been disclosed as done to Southeast Asia last week, but this week most offers have been heard at higher levels. Higher offers have been mainly coming on CFR basis and from traders because prices on FOB basis have been stable or even slightly higher, so traders have been more cautious about offering in a short position. A contract for a sizable lot of ex-China 5SP modified grade billet was widely discussed at $435/mt CFR Manila, while the lowest previous deal price level for 5SP billet in Southeast Asia was at $438/mt CFR to Indonesia and $440/mt CFR to the Philippines. But most sources polled by SteelOrbis agree that this deal was done last week, and not this week, as rumored initially. Most offers for 5SP billet are at $445/mt CFR or higher this week. Also, another deal for 125 mm 5SP modified billet has been heard at $440/mt CFR also to the Philippines. So, the SteelOrbis reference price for import billet in Southeast Asia have increased by $5/mt over the week due to higher offers. 

Turkish billet market has been quiet this week and only occasional sales have been reported in the domestic and import segments. Most buyers prefer to wait and see, taking into account pessimistic expectations for scrap and slow rebar trade. Therefore, some preferred to deal for the billet with short lead time. Particularly, in the Iskenderun region around 10,000 mt of billet were sold at $500/mt ex-works versus $500-505/mt ex-works in offers. An Izmir region-based supplier is offering $505-510/mt ex-works, but the upper end is not considered workable.

Import offers from China have been reported at $455-460/mt ex-works during most of the week, while $452-453/mt CFR levels were also available for short positions earlier. There has been a rumor about sales at $457-458/mt CFR, but the level is considered as high according to the current market conditions. Ex-Malaysia billet is available at $485/mt CFR for 165 mm billet, in line with the past week. Offers from Ukraine are scarce and at the high level - $495-500/mt CFR from one of the mills for end-July and August shipments.

The SteelOrbis reference price for ex-Russia billet has corrected slightly down to $430-432/mt FOB with the midpoint at $431/mt FOB Black Sea, down by $2.5/mt on average from late last week. The major Turkish buyers have said that there have been still very limited offers from Russia. However, there have been reports about some Russian billet volumes traded at $451/mt CFR, translating to $431/mt FOB. Also, there have been rumors about ex-Donbass billet sold at $448-450/mt CFR to Turkey and some sources said about the small volume changing hands at $447/mt CFR, but this has not been confirmed by the time of publication.

Iranian presence in the export billet market is now under jeopardy, taking into account the escalation of the military conflict in the Middle East and possible further developments. Sources report that there has been no significant damage caused to the steel industry facilities, the power supply still remains an issue and, while entering the summer season, the electricity supply to the industrial sector is expected to become aggravated. In the meantime, in the global steel market the billet pricing is weak and Iranian suppliers find the levels not quite workable according to their own costs. The indicative billet price from Iran on exports remains at $410-420/mt FOB with some levels at $425-427/mt FOB heard for the ready cargoes. 

Ex-India billet prices remained stable at $415-425/mt FOB and even though declining trend seemed to have paused, buyers were still unwilling to commit trades perceiving a bottom to be still some distance away. According to sources, at least two mills based in eastern India commenced negotiations for modest volumes with Asian buyers at a starting price of $415/mt FOB, which was at the lower end of the range. However, no deals were successful as neither of the sellers were willing to offer an additional discount.