Global View on Billet: Uptrend everywhere amid cost pressure, higher freight, low supply

Billet prices have posted significant increases in all major import and export markets globally. On the one hand, the positive mood in China and rises in iron ore prices to over $110/mt CFR have pushed up Asian FOB prices, while on the other hand major CFR prices in Turkey, Southeast Asia and other destinations have additionally been supported by higher freight rates. It has to be said that demand is generally improving as buyers have been afraid of failing to secure needed cargos in time amid the rather limited availability.

Ex-China 3SP billet prices have increased in three rounds this week to $455-465/mt FOB on Friday, up by $10-15/mt over the past week. The main reasons are the stronger support from the local market, which has improved in terms of demand, the continued appreciation of yuan and high iron ore prices, which have been pushed up by concerns about Pilbara shipments due to the possible strike at BHP Billiton, as well as the ban on imports of BHPs’ Newman fines from next week announced by the Chinese state-owned trading arm.

In addition, the shortage of oil and the surge in its price have been highly discussed in the market and resulted in strong volatility of freight rates for steel and raw materials. After the significant increase already seen last week, freight rates surged again on March 9 and were rather stable during the rest of the week, while some logistic companies have stopped quoting prices. Freight has become a big issue with some shipping lines either asking for cancellations or increasing rates by $20-30/mt for various destinations. In general, freights for the short routes (from China to Southeast Asia or from the Black Sea to Turkey, so avoiding the Middle East region) added $5-10/mt, while longer voyages have seen a rise of $20-25/mt as confirmed by major market participants in the global billet market.

The major Indonesian mill Dexin Steel increased billet offers by $10/mt early this week and by an additional $5/mt on Friday, to $485/mt FOB. The shipment month is still April, according to the official price list. But there has been a rumor about a sale to a trader at $470/mt FOB for April shipment this week, after a long time of only local sales. Though the destination was unclear by the time of publication, some sources believe it may be Turkey. Before this, Dexin Steel managed to push billet in the local market at around $460-465/mt FOB.

A number of deals for import billet, mainly Chinese origin, have been reported as done to Southeast Asia this week. A few sales for 5SP 150 mm billet have been confirmed as done to the Philippines at $481-482/mt CFR, up by $13-14/mt from the previous sales to this destination. At least one lot of Asian 3SP 150 mm billet has been sold to Taiwan at $480/mt CFR, with no availability of offers from Russia and the absence of Iran. Also, a sale to Thailand was reported at $475-478/mt CFR in the middle of the week for grade equivalent to 3SP 150 mm. Market sources said that new freight rates are up to $28-30/mt from China to major Southeast Asian ports, meaning that traders need to offer at least $483-485/mt CFR in the next round of sales.

In Turkey, the domestic billet prices have settled at $505-520/mt ex-works this week, up $5-10/mt over the week, mainly on the back of increasing rebar prices and also high offers for most import billet origins. Integrated mill Kardemir has traded around 80,000 mt at $505/mt and $515/mt ex-works, while in the Izmir and Iskenderun regions the offers were mainly at $510-520/mt ex-works.

Import offers from China have reached $515/mt CFR by the end of the week, up from the earlier wider range of $495-510/mt CFR. The cargoes are available for May shipments, with no current interest seen and with the latest deal closed at $490/mt CFR last week. Ex-Malaysia offers have increased by $5/mt to $515/mt CFR for May shipment from one of the traders, while the evaluated indication from Indonesia is estimated at $530/mt CFR and above. Offers from Iran for a billet cargo on the water have been reported at $485/mt CFR Iskenderun.

In the current situation, Turkey is expected to pay more attention to billet offers from the Black Sea/Azov Sea region. The prices from Russia have increased from $465/mt CFR to $470-480/mt CFR with rumors about a decent sale at the upper end of the range, which has not been confirmed by the time of publication. The SteelOrbis daily reference price for ex-Russia billet has increased by $5/mt to $440-450/mt FOB.

Ex-India billet offers are quoted around $5/mt higher in the range of $460-465/mt FOB, but attempts to increase prices have been mainly due to rising costs and the rise of the local market, rather than any improvements in the export market. Local trade-level billet prices have surged INR 1,500/mt ($16/mt) to INR 45,500/mt ($494/mt) ex-Mumbai and are up INR 950/mt ($10/mt) to INR 42,200/mt ($459/mt) ex-Raipur in the central region.