Global View on Billet: Turkish market surges by over $50/mt, China weakens

- The global billet market has been showing non-uniform moves over the past week, though the uptrend has continued in general. Ex-CIS suppliers have pushed prices up by $50/mt and above since last Friday, seeing the surge in the Turkish market. At the same time, in the Asian region, the situation has been less bright as Chinese importers have cut bids and have decided to take a wait-and-see position for now.

- Billet price developments seen in Turkey this week turned out to be surprising for the majority of market players. Following the rapid price rise for import scrap and concerns regarding rising input production costs, billet in the domestic market in Turkey increased in a few steps by $55-60/mt over the past week to $690-710/mt ex-works in the latest offers. Moreover, the increase was justified by the buyers, accepting the mentioned level at almost every step. Specifically, mills in the Iskenderun region achieved sales at $650/mt last week, while this week trade started from $660/mt and continued at $680/mt and $690/mt, all on ex-works basis.

- Moreover, the rebar market situation in Turkey has improved this week, supporting billet prices to a certain extent. While earlier there were doubts whether there would be demand for buyers to accept corresponding rebar prices, this week some active restocking activity was seen in the domestic market in Turkey. Within the course of the week, sales prices have increased from $700-705/mt to $720/mt and touched $740/mt, all ex-works. The active local market is expected to give the mills a breather from exports, where they are testing $735-750/mt FOB offers.

- Improved prices and buyers’ interest in both the local billet and rebar markets in Turkey have naturally resulted in some significant support for the CIS sellers. Not many offers have been seen on the import side though, as the sellers mainly tend to wait and see, the indicative level has hit $690-700/mt CFR, specifically from the large suppliers. The general market allocation is said to be limited on both the mills’ and traders’ side, therefore the highest bids for medium lots have been reported at $700-705/mt CFR. One deal was discussed in the market as closed at $720/mt CFR, but most sources believe this could have been possible only for wire rod quality.

- As a result, CIS-based billet exporters have become very bullish, targeting around $670/mt FOB, $40/mt higher since Wednesday, October 13. The reference price has been settled at $650-670/mt FOB Black Sea for now. There was information about a large Ukrainian mill selling at the higher end of the abovementioned range to Turkey, while mills are unlikely to provide any price below $650/mt FOB to other outlets, also as the overall allocation is not large. The previous deals for ex-CIS billet to other sales destinations apart from Turkey were at above $620/mt FOB, to Africa and Europe in particular. 

- The suppliers who mainly target the Asian market have failed to increase prices sharply due to the weakening of the Chinese market. Following the good start after the long holiday since last Friday, bids for imported billet in China had fallen significantly by the middle of this week and most customers have been either voicing low bids or staying out of the market altogether. The tradable price level has slipped to $695-705/mt CFR now, down by $20-25/mt from last Friday and even below $700-710/mt CFR seen before the holiday. The expected easing of production cuts in October and the uncertainty in the rebar market have been behind the recent drop in China. 

- In Southeast Asia, overall price levels have moved up compared to the previous week, but buyers have been mainly bearish as they have seen higher supply volumes, offered by suppliers, usually targeting China. Offers for 125-130 mm billets to the Philippines have been reported at $710-715/mt CFR recently, while the tradable level has been assessed at $700-710/mt CFR. Only one deal has been reported to the Philippines over the past week. A cargo of 20,000 mt of ex-Russia 100 mm billet has been sold at $720/mt CFR. 

- Ex-India billet prices have increased to $630-640/mt FOB owing to some gains of bids from traders, who still believe demand from Asia will increase in the near future. But the recently announced bullish targets of Indian mills at $670-680/mt FOB, based on the positive sentiment in the local market, have been assessed as too high for now for Asian buyers, following the slowdown in China. 

- The main Iran-based steel mill Khouzestan Steel had closed three tenders, each one for 40,000 mt of steel billet, at $640/mt FOB BIK. In addition, another seller has been targeting and getting $642.5/mt FOB in its export tender. The slight increase for ex-Iran prices has been due to cautious sentiments in Asia.