Global View on Billet: Turkish billet prices rise over $100/mt this week, impact on Asia less obvious so far

This week, prices for steel billet have increased globally, reflecting the severe impact of the war in Ukraine in terms of steel and raw material shortages. Sanctions against Russia, including the reputational risks of working with material of this origin, are also expected to result in the minimal presence of ex-Russia volumes in the market. As reported earlier, most Ukrainian mills have halted their production due to the military attacks and disrupted logistics, specifically port operations. As a result, no export shipments are expected from Ukraine for a while now and the market needs to substitute these tonnages. Another issue is that, according to sources, there is a negative effect on the shipping market as vessel owners refuse to go to the Black Sea due to the obvious risks. In addition, insurance companies have increased their premiums very significantly, making vessel owners look for other options. “Certainly, there are certain Black Sea fleets that cannot go out and need to work, mainly Russian vessels, etc, but those are also refused by banks,” a trader said.

Turkey and North African buyers are the ones being hit most by the situation, given the numerous cargoes booked earlier for March-April shipments, which will not be delivered now, as sources expect. Many traders are seeking to cover their positions, buying whatever they can find, and, since there are not many options now, this has resulted in many bookings from Turkey and has boosted the billet price in the region quite significantly.

The local billet prices in Turkey have increased to $850-870/mt ex-works/FOB in the most recent deals and offers compared to the levels seen before the war started. The first deals were closed by traders at $720-730/mt FOB for exports, then at $760/mt ex-works to the domestic market, then at $780-785/mt, again on ex-works basis. In a short time, the deal prices hit $800/mt ex-works, which was followed by a 40,000 mt sale from the northern part of the country to the Iskenderun region at $850/mt ex-works, sources say. The highest offer level, heard for now, is $870/mt ex-works/FOB. In the import segment, there have been offers from Asian countries, including India, at $810-815/mt CFR, but, taking into account the rapid increase in local billet prices in Turkey, import offers may increase further. While most buyers are seeking to substitute the ex-CIS and specifically Russian billet origin with ex-Asia billet, some traders continue to offer billet from Russia at $725-780/mt CFR, taking shipment and payment risks. Most of the sources surveyed by SteelOrbis do not expect that buyers will work with Russia due to its aggression against Ukraine, but some traders still report there may be ways for this kind of trade, but they are more expensive and rather risky, including reputational risks.

Traders have been actively seeking ex-ASEAN billet offers this week, trying to take positions for further sales either inside the region (in Southeast Asia and Taiwan) or to the MENA region, as shortages will persist due to the halting of supplies from Ukraine and uncertainty regarding future sales from Russia. A deal for 20,000 mt of ex-Vietnam BF billet has been done at $730/mt FOB for April shipment to a trader seeking a position. Some sources believe that this material could be offered to Turkey, Europe or other countries in the MENA region. 

By the end of the week, suppliers from the ASEAN region have voiced more new offers, raising them to $750-760/mt CFR Manila (from Indonesia, Malaysia and Vietnam). Market sources report the latest booking done to the Philippines this week at $725/mt CFR for either ex-Malaysia or ex-Vietnam billet, but with the further rise in offers this level is hardly achievable now. In total, the reference price for imported billet in ASEAN has increased by $32.5/mt on average over the past week, much lower than in the MENA region. 

- The sharp increase in the Asian billet market has not been connected with the obvious losses of ex-Russia supply in this market, though concerns have started to grow. Market sources report problems with already sold cargoes for which LCs have been established. The Philippines is highly dependent on ex-Russia billet supply, and the allocation from other suppliers for shipments in March and April is unavailable. So, the concerns exist regarding short-term supply disruptions. But some buyers in the Philippines are saying that they are not seeing a large problem, at least for now. A large trader having “a pending shipment from Russia” at the moment said that there are “just some concerns regarding banking channel restrictions. We can always transact via others.” Though the short-term problems with getting ex-Russia shipments and the next deals are widely discussed, the current situation is unsustainable for long, sources believe as, despite sanctions, buyers in the Philippines are heavily dependent on ex-Russia billet. It is too early to evaluate the situation as it may be illegal for buyers from the Philippines to purchase from Russia in the future if more sanctions are imposed. So, the only option for suppliers from there will be China. 

Nevertheless, bids from China were so low lately that a resumption of imports has not been predicted, at least for now. China will remain absent from imports, sources believe. The SteelOrbis reference price for imported billet in China has remained at $650-660/mt CFR for now. “I believe that it will be hard to accept above $650/mt CFR,” a source said. 

A major Indian state-run mill has closed a tender for 30,000 mt of 150 mm billet by the end of the week, with the final bid above $700/mt FOB, in accordance with the market expectations earlier this week. The final price has been confirmed at $720.5/mt FOB and the deal was signed yesterday, March 3, according to sources, up from the previous deal at $648/mt FOB. Most sources believe that the shipment will go to Turkey, not to Asia. 

Iranian billet producers have managed to conclude deals at higher prices and a further rise is anticipated. Their major sales destinations are still Asian countries, even though customers in this region are not ready to accept big price increases, at least for now. Two deals from Iranian mills have been signed at $610/mt FOB and $615/mt FOB for April shipment this week, according to a number of sources, while last week a contract from one of the sellers was done at $603/mt FOB. SteelOrbis has learned that the final sales destinations for these cargoes are expected to be Southeast Asia or China. New offers from BF-based Iranian mills have been reported at $620/mt FOB or higher.