Global View on Billet: Slight corrections in prices and mood due to weaker Asia, halt in scrap support

After a few weeks of a gradual uptrend, billet prices in the major outlets globally have been corrected down, reflecting weaken moods in Asia after declines in China’s futures prices, and with less support from raw materials like scrap. Also, demand has been even lower with most buyers waiting for a clearer trend.

The SteelOrbis reference price for ex-China billet stands at $430-435/mt FOB, down by $5/mt over the past week with some negotiations heard at slightly below $430/mt FOB in the middle of the week. This decrease is coming from the local market, as futures are down and demand in winter is softening, while even lower production cannot overcome these poor demand conditions. A few market sources agree that the main driver of the billet price decline early in the week was the drop in coking coal and coke futures prices in China, signaling that demand for the raw material is weak and also that the outlook is dull.

There have not been many deals for Chinese billet signed recently, but negotiations have definitely been more active after the price decline in the Middle East. Two large lots of Chinese billets are disclosed to have been sold to Turkey at $465-468/mt CFR base last week and this week. Also, a Saudi Arabian importer is in the market, but its bids are at least $10/mt below offers, which were at $465-468/mt CFR this week.

The official offer price level for ex-Indonesia billet is at $437/mt FOB by the end of the week and negotiations were at $435/mt FOB, down by $5/mt from last week. But since the offers are for March shipment, interest from buyers has been low.

Billet prices in Turkey have remained high locally considering that domestic rebar sales are still strong, though some slowdown in daily trade is still seen. Currently, rebar prices are at $556-585/mt ex-works depending on the region, down from around $565-595/mt ex-works earlier. Some mills are still indicating $590/mt ex-works but it is not workable as most buyers have restocked enough and are now just waiting. Billet offers are at $515-525/mt ex-works, versus $520-530/mt ex-works seen earlier this week. In the Iskenderun region, two mills sold large cargoes - 20,000 mt and 35,000 mt - last week at $529/mt and $525/mt ex-works. The higher level is for prompt delivery.

Import offers from China have settled at $470/mt CFR by the end of the week, down from $475-480/mt CFR seen earlier. According to sources, one 45,000 mt cargo was sold at $475/mt CFR Marmara, but the price includes high manganese extras and slightly higher freight than usual. Last week, a 50,000 mt lot was sold at $465/mt CFR Izmir. Both deals are for early February shipments. The indications for ex-Indonesia billet are at $480/mt CFR, while the expectation from Malaysia is not higher than $490-495/mt CFR, both for March shipments. At the end of last week, two ex-Malaysia cargoes were sold to the Iskenderun region at around $485/mt and $490/mt CFR for February shipments. Ukraine has increased its price from $495-498/mt CFR to $505/mt CFR.

Ex-Russia billet business activity has remained slow this week given the somewhat low availability since Russian mills are not so inclined to export due to the unfavorable exchange rate. In Turkey, price indications have been at $460/mt CFR, with no deals reported, while levels $5/mt lower are considered also workable. The SteelOrbis reference price for ex-Russia billet remains at $440/mt FOB.

In the MENA region, Egypt’s import segment remains silent due to the high safeguard restriction, while domestic prices for billet have stabilized at EGP 28,000/mt ex-works or $517/mt ex-works, based on $1 = EGP 47.54. Nominal import offers are assessed at $470-475/mt CFR from Russia and around $10/mt higher from China.

In Saudi Arabia, local prices have remained at $480/mt CPT, while import offers from China stood at $465/mt CFR this week, for February shipments. One buyer is in the market for a 50,000 mt cargo but is aiming to for a price at least $10/mt lower. Omani billet is offered in the market at $500/mt CPT in Oman and the UAE, up from $485/mt CPT in the latest deals. Iranian billet offers in the GCC have been reported at $440-450/mt CPT.

Southeast Asia’s import billet market has been inactive over the past week since, even though offers have softened slightly, buyers’ prices ideas are also lower. Offers for 5SP billet in the Philippines have been at $450-455/mt CFR this week, down by $5/mt over the past week, while the tradable level has been assessed at $445-450/mt CFR. As for Chinese 3SP billet prices, offers have been reported at $450/mt CFR in Southeast Asia. But after last week’s sale of 40,000 mt of Iranian 5SP to Indonesia, no new bookings have been heard. Even $450/mt CFR is high for many sources, and can work only if someone needs 5SP.

A few deals for ex-Russia 3SP billet were disclosed as having been done to Taiwan around 10 days ago at $430/mt CFR. New offers are starting from $440-445/mt CFR.

While most offer prices for billets from India have been kept unchanged at $435-440/mt FOB, some offers have showed wide variations ranging from $430/mt FOB on the lower side to $445/mt FOB on the higher side. According to the sources, some large mills attempted to hike offers to levels of around $445/mt FOB early in the week but adjusted their offers downward subsequently to push through deals successfully, indicating that demand in most Asian destinations was not ready to absorb any price hikes amid continued resistance from buyers. For example, an Odisha-based integrated mill reported a trade for 30,000 mt of prime concast billet at $425-430/mt FOB, after revising its initial offer submitted at $440/mt FOB.