Global View on Billet: Uptrend continues, prices in Asia rise at faster pace

The uptrend in the global billet market, which started last week, has been gaining pace this week. The most significant increase has been seen in Asia as the Chinese market has been posting steady hikes in local and futures prices based on positive expectations, while ASEAN-based mills have finally managed to sell bigger volumes in the export market at increased prices. Rises in the Turkish import and ex-Russia billet markets have been relatively small as demand has been limited due to sharp fluctuations in exchange rates and since the competition between suppliers has remained tight.  

Demand for ex-ASEAN billets has increased significantly this week as, with the recently announced price increases, traders have become more active in purchases. In total, up to 100,000 mt of ex-ASEAN billet have already been sold this week and traders will target mainly Africa and Turkey with these tonnages. The recent deal prices for ex-Indonesia billet have been at $507-510/mt FOB for July shipment since last Friday, with around 60,000-70,000 mt confirmed as sold, which indicates a rise from the previous transactions at $490-495/mt FOB for June shipment. Most of these tonnages are expected to be sold by traders to North Africa, Egypt and Morocco in particular. At least one deal for 20,000 mt of this volume has been widely discussed as having been done to a trader who is targeting Egypt. The CFR price has not been confirmed by the time of publication, but was heard at $530-540/mt CFR. In addition, 20,000 mt of ex-Malaysia billet have changed hands at $515/mt FOB or slightly above recently, up from the sale by the same producer done in the previous round of bookings at $500-505/mt FOB. This volume is expected to go to the Turkish market with the CFR price assessed at around $560/mt CFR or slightly higher.   

On Friday, the leading Indonesian mill announced a further increase in offers, raising them from $510/mt FOB to $520/mt FOB. “I heard there were some sales at above $510/mt FOB level today, so the mill hiked official offers again,” an Asian trader said. Though this has not been confirmed by the time of publication, the last deal for 10,000-20,000 mt of ex-Indonesia 3SP billet has been taken as a position by a trader at $515/mt FOB, with the targeted market being Turkey.

After the sharp increase in import billet offers early this week, importers from Southeast Asia have been cautious, not hurrying to sign deals at higher levels due to a lack of confidence in the market. Offers for BF/EAF 5SP 130 mm billet have been coming at $530-535/mt CFR and up to $540/mt CFR to the Philippines, up by $20/mt since last Friday and by as much as $25-30/mt above the lowest level seen early last week. But no new confirmed deals have been reported to buyers in the Philippines at the current higher level so far. Market sources are waiting for some IF billet sales in the near future at $520-525/mt CFR or so as customers will try to find cheaper options. The only deal for ex-Indonesia billet has been reported to Taiwan at around $530/mt CFR or a few dollars above this level this week by a trader for July shipment.   

Along with ex-Russia offers, Turkish buyers have been receiving indications from Asian suppliers at almost same levels, at $550-555/mt CFR from Indonesia and China, and at $555-565/mt CFR from Malaysia, up from $540-545/mt CFR in deals last week. In addition, according to sources, an ex-EU billet cargo has been on offer at $562/mt CFR this week. In this situation, it is expected that interest in Russian material may be seen only from small buyers and for urgent needs, while large producers will continue concentrating on scrap imports and negotiations for large billet lots from Asia, particularly from Malaysia. In the domestic market in Turkey, the billet price level is at $595-610/mt ex-works depending on the region, but trade has been slow, impacted by the currency-related confusion in the local rebar segment. The same currency issue is also making billet imports to Turkey more challenging, and so some buyers, who also suffer from the export license problem, prefer to postpone their import talks or to insist on certain lead times. 

This week, billet suppliers from Russia and from Ukraine’s occupied Donbass region have been aiming to increase prices supported by positivity in the import scrap segment in Turkey, and, moreover, due to the uptrend seen in the Asian billet market. As a result, Russian offers to Turkey, which remains the main outlet for them, have been mainly reported at $550-555/mt CFR and even up to $560/mt CFR, following small sales at $540-545/mt CFR done and reported last week. However, although some traders assume $550/mt CFR would be accepted by some buyers, a majority of market players doubt that levels over $545/mt CFR would have been workable in Turkey this week. As a result, the SteelOrbis daily reference price for ex-Russia square billet exports has remained unchanged at $515-520/mt FOB level in view of the absence of deals and sceptical expectations. 

In Iran, business activity in the billet market has remained dull with no new export sales or active tenders announced, according to market sources. The latest transaction was closed at $485/mt FOB for 30,000 mt, while the initial targets stood at $490-495/mt FOB. In fact, given the price increase currently seen in Asia and confirmed by rather active trade, Iran may voice higher billet price targets next week. However, achieving those prices may be challenging, taking since that Asian market players currently assess ex-Iran indications at $520/mt CFR with an estimated freight of $45/mt. In the GCC, where the longs market will remain slow during the summer months, the workable billet prices for ex-Iran material are considered to be at around $500-510/mt CFR, with freight estimated at $20-25/mt.

Ex-India billet prices have increased over the past week, but more due to sellers testing if the market has bottomed out, though with limited deals reported at lower levels. Ex-India billet offers have been quoted in the range of $510-530 FOB, with deals concluded at around $500-510/mt FOB, which was still an improvement over the reference prices of $480-495/mt FOB a week ago. The sources said that an eastern region-based mill has reported a booking of 20,000 mt by a Chinese trader at around $500/mt FOB. This signals that ex-India prices have been regaining some competitiveness in the Asian market compared to other origins. Another mill reported a trade at $505/mt FOB and the same seller also concluded a smaller deal for 15,000 mt with a Singapore-based Japanese trading firm at $510/mt FOB. However, it may be noted that government mills, the most active exporters of semis, are still out of the market and no tender-based offers have been heard from them over the past two weeks. 

* - confirmed in deals