Global View on Billet: Prices stabilize or rise only slightly in most outlets as buyers withdraw

-  This week has been much slower in terms of demand in the global billet market with only some tonnages heard changing hands to traders, while end-users have mainly withdrawn from the market, not willing to accept higher prices. As a result, in some major outlets like Turkey or Southeast Asia prices have stabilized this week after previous gains, while only some small rises have been reported by a number of exporters in the international market.  

- Demand for ex-ASEAN billet has slowed this week, with only one deal confirmed as done. But the price level in the deal is higher than contracts last week, which signals that sentiment has not worsened yet. A contract for around 10,000-20,000 mt of billet from an Indonesian mill has been signed at $517/mt FOB. A trader has taken this as a position for further sale to the Middle East, Africa or Asia, sources believe. The previous deals were done at $507-513/mt FOB, as SteelOrbis reported earlier. Offers from the Indonesian mill have remained at $520/mt FOB, stable from last Friday, while offers for ex-Malaysia billet have been unofficially at $525/mt FOB on average.

- Ex-China 3SP billet prices have remained stable since late last week at $510-530/mt FOB, but most offers have been reported at $515/mt FOB during the week. Moods in the local Chinese market have improved since Tuesday with the average local billet price in China adding RMB 80/mt ($11/mt) over the past week and bringing the tradable import level up by $10/mt to $440-445/mt CFR. In order to keep liquidity in the banking system adequate at a reasonable level, the People’s Bank of China (PBOC) conducted reverse repo operations to the amount of RMB 2 billion ($0.28 billion) through interest rate bidding on June 13, 2023, with the repo rate decreasing by 10 basis points to 1.9 percent from 2.0 percent. This was the first reverse repo rate (RRR) cut since August 2022. This move by the PBOC was not widely expected by market sources and it has led to a rise in steel and raw material futures prices. However, skepticism over the strong support to the property market, which is the main driver of steel demand in China, has remained. As for steel prices in China, market sources still doubt any visible rises as they expect a slowdown of demand due to the rainy hot weather in different parts of China, while steelmakers may raise production, seeing an improvement in margins, which will be negative for the demand-supply balance again.

- Prices for imported billet in Southeast Asia have remained stable this week after the sharp increase reported last week, but they have remained too high for most importers who have been bidding at levels $10-15/mt lower. Most offers from traders for ex-ASEAN and ex-China billets are still at $530-535/mt CFR and mills have been asking for up to $540/mt CFR Manila. One deal for ex-Vietnam IF billet has been rumored at $525/mt CFR the Philippines, though this could not be confirmed by the time of publication, with most market sources assessing this level as being too high for customers. Buyers are still rather quiet and offers are high for buyers who are targeting $515-520/mt CFR Manila for 5SP.

Turkey’s billet market has remained dull this week with almost no movement seen in prices. Domestically, the largest activity has been seen in the Karabuk region since the integrated producer there Kardemir has traded 25,000 mt at $600-605/mt ex-works, up $5/mt over the past week. The producers in other regions of Turkey have maintained their offers at $595-610/mt ex-works as a general range, with no sizeable bookings reported. The key reason for the silent trade is the situation in the rebar segment, where business activities have been severely impacted by currency fluctuations. In the local market, some mills have been trying to specify exchange rates while buyers have been minimizing their purchases in order to decrease risks. At the same time, there is a currency availability problem, which has also been putting pressure on import billet activities. However, some market sources expect the Turkish central bank decision due on June 22 to bring some confidence to the market, which will result in the restart of trade.

For now, billet offers in the import segment in Turkey have remained mainly at $560-565/mt CFR from Malaysia and $555-560/mt CFR from Indonesia, while indications from Russia and Donbass are still at $550-555/mt CFR in terms of targeted levels. The most recent deals for the latter origins have been closed to Turkey at $540-545/mt CFR in early June. In the meantime, the price idea for ex-Russia billet for immediate shipments is at $560-565/mt CFR, down from $570/mt CFR earlier. As a result, given the muted business activity, the SteelOrbis reference price for ex-Russia billet has been maintained at $515-520/mt FOB.

- Ex-India billet prices have continued to go up gradually amid improved interest from buyers resulting in a rise in the number of trades concluded to traders over the past week and government mills returning to the market with fresh offers. Having increased ex-India offer prices to the range of $510-530/mt FOB earlier in the month, sellers have been tending to maintain offers unchanged and have been holding back attempts to push up prices further, waiting for the improved demand to consolidate and for a stabilization of workable price levels. The SteelOrbis reference price has increased by $5/mt on the lower end of the range and by $9/mt on the upper end over the past week to $505-519/mt FOB. An Odisha-based integrated private mill has concluded a spot booking for 30,000 mt of billets at $515/mt FOB and another tonnage was booked to an Asian trader at $505/mt FOB, sources said. A western region-located mill has confirmed a booking for end-of-July shipment of 25,000 mt to Kenya at $519/mt FOB. 

The workable billet prices from Iran have inched up by $5/mt in the most recent deals, following a rather long period of silence. The uptrend in Asia has supported the general sentiment, although the considerable logistic costs still prevent the Iranian material from being sold with ease to the main destinations. In fact, the most recent tender from Iran was closed at $490/mt FOB for a minimum of 30,000 mt, although some sources report the total volume of sales at around 70,000 mt. In Asia, the latest ex-Iran offers stood at $520-525/mt CFR, while in the GCC they were at $510/mt CFR Jebel Ali. As a result, the markets need to move up by another $10-20/mt depending on the destinations in order for traders to sell their recently booked cargoes at a profit.

* - lower end of the range refers to deal, while higher – offers from Malaysia