Global View on Billet: Uptrend driven by costs and sentiments

Billet prices in the global market have continued to move up this week as they have been driven by costs, with higher scrap prices seen, and sentiments, especially in the Asian market, have also been positive. Further rises are not excluded, though customers will need time to accept higher levels.  

Offers for billets and slabs from ASEAN-based mills have increased further and by larger margins than earlier as suppliers have managed to sell sizable volumes last week and also this week. Prices for ex-Indonesia billet have increased by $10/mt from early this week and $15/mt from last week to $515/mt FOB. Ex-Malaysia billet offers are also up, by $10/mt to $510/mt FOB. According to sources, there have been sales from a Malaysian mill at 493-500/mt FOB, with traders covering their positions, while one deal for 10,000-20,000 mt of ex-Malaysia 5SP billet was closed at $505/mt FOB to a trader late last week for a long position. Ex-Indonesia slab offers have been hiked to $525/mt FOB. Last week and this week, the leading producer in Indonesia managed to sell a total of 100,000 mt of slabs to Latin America at $492-505/mt FOB, while also two lots of around 80,000 mt in total have been traded at near $500/mt FOB to other destinations.

The ex-China prices for 3SP billet added $5/mt early in the week and a further $7.5/mt later, reaching $515/mt FOB, while exporters have been inactive. The average local Chinese billet price has reached RMB 3,658/mt ex-warehouse on November 10, according to SteelOrbis, which is up by RMB 88/mt ($12/mt) over the past week. This level translates to $451/mt, excluding 13 percent VAT.

In Southeast Asia’s import market, new offers of Asian origin 5SP BOF billet to the Philippines have been at $525-530/mt CFR, though some traders are still ready to provide below $525/mt CFR if there is a firm bid. IF billet was available at $510/mt CFR Manila. The latest deals were done by traders at $517-520/mt CFR, according to sources. The SteelOrbis reference price for import billet in Southeast Asia has increased to $520/mt CFR, up $2-5/mt from last week. Ex-Iran billets have been traded to Indonesia at $500-505/mt CFR for 3SP, which has been assessed as “a good price” in the current rising market.

Alternative billet suppliers have also been targeting higher prices. The latest offers for ex-Russia 150 mm billet from the Far East to Taiwan have been reported at $500/mt CFR. A deal for the same origin was done at $495/mt CFR late last week, up from the contract price at $490-493/mt CFR reported a week ago.  

Limited availability and increasing import scrap prices in Turkey are currently the main drivers of higher ex-Black Sea square billet price indications. The number of offers in the market is literally minimal, while the workable prices, particularly in the Turkish market, have increased. Early this week, a 20,000 mt lot of ex-CIS billet (presumably of Belarus origin) was sold at $505/mt CFR for December shipments, which translates to around $480/mt FOB Black Sea. In addition, a 5,000 mt lot of billet ex-Donbass changed hands at $510/mt CFR Bartin for end-of-November shipment. At the end of the week, a total of 10,000 mt of ex-Donbass billet, again for November shipment, was sold to Turkey at $513-515/mt CFR Bartin. Offers for ex-Russia prompt billet cargoes, according to sources, have been voiced at $520/mt CFR.

As a result, the SteelOrbis daily reference price for ex-Black Sea square billet has been increased by $7.5/mt from Thursday and by $12.5/mt over the past week to $485-490/mt FOB. In Turkey, the CFR price level has increased by $15/mt on the lower end over the past week to $510-520/mt CFR.  

In the domestic market in Turkey, integrated producer Kardemir sold close to 60,000 mt of billet at $525-535/mt ex-works depending on the grade. The supplier’s price had turned out to be so attractive that not all prospective buyers managed to receive tonnages. In the other regions, namely, Izmir and Iskenderun, offer levels are at $545/mt and $545-550/mt, both on ex-works basis. Local billet prices in Turkey are set to remain rather high, given strong scrap prices and limited supply. However, increased longs prices from Turkey are struggling to gain acceptance, at least for now.   
Iranian billet exports have been rather lively lately, with at least two cargoes reported to have been sold. Prices, however, have remained on the stable side since sellers have not yet given in to buyers’ much lower bids. According to sources, a 20,000-25,000 mt billet cargo has been sold from Iran to Africa at $470/mt FOB, while it is mostly believed to be a sale from an earlier-taken position. In addition, according to sources, a large billet producer in Iran has closed a tender for billets for December shipment at $470/mt FOB for around 30,000 mt. Another large supplier has freshly announced a tender for 20,000 mt, with the expected workable price level being $465-470/mt FOB. Iranian billet offers to the UAE and Oman are at $495/mt CFR still and this seems workable with a minor discount, while in Asia the indications at $510/mt CFR have not been found to be competitive. The latest deals, according to sources, have been closed at $500-505/mt CFR to Indonesia.

Ex-India billet trade activity has witnessed a revival over the past week, with more sellers emerging and buyers accepting slightly higher prices at a time when local prices and volumes have continued downhill. Ex-India tradable billet prices have settled at $485-495/mt FOB, versus $475-490/mt FOB last week, and the targets of government mills are starting from $500/mt FOB. Though the tender sales of government mills for 60,000 mt of billet are still open, the sources said that an Odisha-based mill reported a trade for 20,000 mt in a spot export deal with an Asian buyer at $485/mt FOB, which, though, was lower than the $500/mt FOB quoted initially but still higher than deals reported at as low as $475/mt FOB a week ago. Another eastern Indian integrated mill concluded a trade for 35,000 mt to the Middle East at $492/mt FOB and another tonnage for Singapore at $490/mt FOB, the sources said.

* - latest deal prices