Global View on Billet: Asia remains negative, some hike attempts may be seen in Turkey

This week has brought a further softening of billet prices in the global market mainly due to negative sentiments in the Chinese market. However, following a small increase seen in scrap prices in Turkey towards the end of the week and the relatively limited billet supply, there are expectations of some price hike attempts in this region, though the outlook for the Asian market is still gloomy.

The ex-China billet reference price has been at $490-500/mt FOB this week, down by $7.5/mt from late last week, due to constant declines in futures and spot prices. But as ASEAN and Chinese prices are at the same level, there have been no active sales from China. Weak fundamentals and seasonally falling demand have been behind the recent drop. However, on Thursday, futures prices rebounded as rumors emerged that China will lower crude steel production by 18-20 million mt this year. Some market sources said that this is a preliminary plan which has not been officially presented yet.

Bids for imported billet in Southeast Asia have declined again this week after just a slight increase previously. Some traders have resumed offering in short positions, reflecting the bad outlook. The SteelOrbis reference price for imported 5SP and 3SP billet stands at $505-520/mt CFR, with the average level of $512.5/mt CFR, decreasing by $7.5/mt on average over the past week. In the Philippines, offers for ex-Asia billet have been reported at $515-520/mt CFR this week, down by $5/mt from deals reported last week. Moreover, buyers are now waiting for $510/mt CFR. In Indonesia and Thailand, the lowest offers have been reported for ex-China 3SP billet at $505-507/mt CFR and market sources have said that they may attract some customers. However, some buyers, seeing aggressive offers, have lowered their bids to $500/mt CFR.

An indicative price for ex-Indonesia billet has been reported at $495/mt FOB, while official offers were at $500/mt FOB in the middle of the week. Though offers are down by $5/mt over the past week, the market is assessing the tradable level as stable at $495/mt FOB, since suppliers are refusing to lower them, having good order books for July shipment. At least four deals were done at $495-500/mt FOB by ASEAN mills in late May, but no new transactions have been reported this week.

Some business activity has been seen in the import billet market in Turkey, while in the domestic market prices have remained unchanged due to the limited demand for rebar. However, a slight upturn in the scrap market has made some market players hopeful that prices may firm up, although no significant surge of demand is expected. Local prices are at $545-560/mt ex-works, with no deals heard and the market is waiting for Kardemir’s announcement next week. In the import segment, according to sources, a short position has been closed by an international trader for ex-Indonesia material for 50,000 mt at $532.5/mt CFR Izmir region. This is an addition to the almost 80,000 mt previously booked from Indonesia and Algeria. The latest indications from Asia and Algeria stood at $530-535/mt CFR, while the same price range has been reported for a June shipment ex-Malaysia billet cargo offered by a trader to Turkey. The availability of Russian billet and the activity of sellers for this product have been low this week, with the indicative levels still being at around $520-525/CFR, versus $515-517/mt CFR in the previous deals for small lots.

The SteelOrbis reference price for ex-Russia billet has remained at $490-495/mt FOB Black Sea. And the tradable level has been heard at $520/mt CFR Turkey mainly amid limited supply of billet in general. Demand from Egypt has been almost nil, and so Russian sellers have been focusing on Turkey or their local market. Some customers in Turkey have been bidding for Russian billet at very low levels of $500-505/mt CFR, but only in the absence of an urgent need to restock.

Ex-Iran billet export activity has remained rather slow this week with no fresh deals closed, although several tenders have remained afloat. In fact, Iranian mills are now offering a total of around 80,000-90,000 mt of billet for export for end-of-July and August deliveries, but there are no takers for now. The workable levels are still assessed at around $475-480/mt CFR, according the latest deals which were closed almost a month ago. Sources believe limited discounts may be achievable, and in that case the CFR prices for ex-Iran billet may be workable in major destinations. In the GCC, Iranian billet is on offer from traders at $505-515/mt CFR, while in Asia the indicative levels have been reported at $505-510/mt CFR. The freight rates to these destinations are at $20-25/mt CFR and $40/mt, respectively.

While ex-India billet prices have remained at $505-510/mt FOB, these quotes have largely been rendered irrelevant as private mills are heard to have been pulling back offers submitted earlier and there is no confirmation of whether an export tender for 30,000 mt by a government mill was closed successfully on May 30. The sources said that private mills were forced to pull back offers submitted in Asia and Gulf markets after the bids received were “too low”, ranging at $480-490/mt FOB, which were not acceptable to sellers. The reference price for ex-India billet has been lowered by $7.5/mt on average over the past week to $500/mt FOB, taking into account that bids have dropped.