Global View on Billet: Uptrend gains momentum with return of demand support

This week, the uptrend in the global billet market has been gaining momentum, as confirmed not only by aggressive offers from major sellers but also by some new deals. By the end of the week, in most major destinations like Asia and Turkey, the market has slowed down as exporters managed to close order books for January and buyers have started to resist prices which are rising too rapidly.

The number of import billet offers from Russia has remained low, partly as some of the mills do not have allocations for end-of-December and even January shipments. However, one of the main reasons for the absence of the 3,000-5,000 mt sellers is the weather-related situation at the ports of Rostov and Taganrog, resulting in significant delays in shipments. As of the end of last week, the workable level for ex-Russia billet was set at around $545/mt CFR Izmir region, while this week the rare offers were voiced at $550-555/mt CFR first, up $10/mt since the end of November, and up to $570/mt CFR. In fact, there has been talk about a 20,000 mt sale at $550/mt CFR Izmir, but the information has not been confirmed by the time of publication.

However, by the end of this week, Turkish buyers’ price idea for import billet has improved to $550-560/mt CFR. So even though overall trading has remained limited, the SteelOrbis reference price for ex-Russia billet has increased by $15/mt over the week to $525/mt FOB Black Sea.

Along with ex-Russia billet, Turkey has been also receiving ex-Asia offers at $560-570/mt CFR with no interest seen just yet due to the long lead time. Ex-Algeria billet offers have remained at $560/mt CFR though there has been a lot of talk about a deal closed at $567/mt CFR for a decent cargo size. Many believe the price level is too high to be true, especially taking into consideration that the latest position cargoes from Algeria to traders were sold at $511-517/mt FOB and maybe up to $520/mt FOB or slightly above in some cases. With the average freight rates up to $27-30/mt for 20,000-30,000 mt, the CFR price to the end-user should not exceed $550-560/mt CFR levels, including the average margin for the trader. Early this week, Algeria had been targeting to sell at $530/mt FOB, while by the week’s end a bid at $535/mt FOB has been turned down by the exporter.

Given rising import scrap, rebar and billet prices in Turkey, local integrated producer Kardemir has increased its billet offer prices over the past week by $15/mt. In fact, some demand has been seen at the new offer levels. Kardemir has opened its billet prices at $600/mt ex-works for S235JR grade and at $605/mt ex-works for B420 grade. According to sources, 25,000 mt of billet have been traded for now and sales are closed. Offer levels in the Marmara and Iskenderun regions are at $630/mt CPT and $610/mt ex-works, respectively. Buyers in the Izmir area are expecting to be offered around $620/mt ex-works.

Prices in Southeast Asia have posted significant rises this week, this time been supported not only by suppliers’ aggressive moves based on more higher raw material prices, but also by the resumption of restocking, in the Philippines in particular. Starting from late last week, buying activity in the billet market in the Philippines has increased with deals for 5SP billet done at $525-530/mt CFR, while some volumes were also sold at $520-525/mt CFR. But in the first half of this week, a number of deals were already done at $525-530/mt CFR, as confirmed by a number of market sources. One deal at a higher level has also been done to a major buyer at $535/mt CFR. In total, not less than 70,000 mt of imported billets have been purchased, most of them from Indonesia, Vietnam and Malaysia. Also, there have been rumors that the last deal to the largest importer in the Philippines has been closed at as high as $545/mt CFR for 5SP, but there has been no confirmation by the time of publication. As result, the SteelOrbis reference price for imported 3SP/5SP billet in Southeast Asia has increased to $525-540/mt CFR, up by $15/mt over the past week, based on deals done this week and the tradable level for now.

ASEAN mills’ export offers increased further - to $520-530/mt FOB from Indonesia and Malaysia in first half the week and even up to $540/mt FOB by the end of the week. After deals done at $505-515/mt FOB, there has been a rumor about an ex-Indonesia sale of 3SP billet at $530/mt FOB late this week to a trader. This level has been assessed as too high and not matching the current CFR prices in Southeast Asia.

Despite higher local billet prices in China, import billet activities have failed to improve so far as the tradable prices are still fairly low for most suppliers and overall appetites and the outlook in the Chinese market have been not as good as expected. The SteelOrbis reference price for imported billet in China has settled at $465-470/mt CFR by the end of the week, versus $445-460/mt CFR last week. And there are expectations that buyers can bid at $475/mt CFR if in need. But even these higher levels have been too low for most suppliers, as they have all been asking above $500/mt CFR in Asia. A contract for at least 20,000 mt of ex-Russia billet is heard to have been signed at $510/mt CFR Taiwan over the past week, and, though some market sources believe that this was a contract for vanadium-added material and that the base billet price was not above $500/mt CFR, this is still a strong signal for an uptrend. Ex-ASEAN offers have been among the highest in the current market in Taiwan and China, at $530-540/mt CFR.

Iranian billet suppliers have remained determined to get higher prices in the coming deals. Apart from some positive sentiments which emerged in the global steel market lately, Iranian steel mills have sought to gain support from the approaching threat of sharply rising gas prices and supply failure increases as Iran heads into winter. Typically, in the winter season, the Iranian government is forced to limit gas supply in order to compensate for the gap between production and demand locally. The ex-Iran billet reference price has settled at $455-470/mt FOB with the higher end corresponding to levels targeted by mills. Meanwhile, a few transactions have been closed this week, with deal prices increasing by $2-7/mt compared to the levels last week. In particular, a 10,000 mt cargo of ex-Iran steel billet has been traded at $452/mt FOB, while a 30,000 mt cargo has changed hands at $453/mt FOB. Besides, a small lot of 5,000 mt of ex-Iran steel billet has been sold at $455/mt FOB.

Ex-India billet tradable prices have reached $480-500/mt FOB, up significantly from last week’s levels of $460-470/mt FOB, and new offers have increased to $505-510/mt FOB at the lowest. A trade for 15,000 mt was done with an Asian buyer at $475/mt FOB, while another booking was at $480/mt FOB last week. But after these deals, such prices are already assessed as being too low in the current market conditions, as Southeast Asian buyers have accepted the recent increase and the levels of $500-505/mt FOB from India have been assessed as workable.