Global View on Billet: Bearishness spreads to most markets amid ample supply, China’s holiday

Bearish sentiments have spread widely spread across most major trade destinations in the global billet market. Only some sellers, such as Iran in particular, have managed to achieve higher deal prices, while most other major suppliers have had to provide discounts, seeing scrap prices gradually decline and as overall allocation in the billet market has been sufficient while demand has declined.

The weakening of the Chinese billet market ahead of the holiday has impacted ex-ASEAN prices. New offers for ex-Indonesia 3SP billet have been lowered by $5-10/mt to $525-530/mt FOB. One sale for up to 20,000 mt has been reported from the mill in the domestic market at $525/mt FOB for March shipment. Also, another ex-Indonesia deal has been signed at $521/mt FOB for West Africa. The CFR price is assessed at above $555/mt CFR. Market sources agree that Dexin Steel has been trying to close March shipment order books before the holiday, and so it has provided some discounts. However, some small part of its allocation has remained unsold, according to some sources regularly buying from the mill. The Malaysian EAF-based mill has also been in the market, but without firm offers, assessing the market at $530/mt FOB.

The ex-China reference price has declined by another $5/mt from late last week, to $520-530/mt FOB. Overall sentiments have been bearish since last week in the Chinese steel market as participants have started to leave earlier due to the holiday. However, futures prices in China posted rebounds on Wednesday and Thursday this week, signaling that some rebound in the spot market is still possible in late February. Nevertheless, trading activity has dropped to minimum levels this week.

Prices of imported billet in the Southeast Asian market have remained stable compared to last week, but the mood has been bearish. IF billet offers, which were voiced at $535/mt CFR Manila last week, have been rare lately. Some market participants said that at least one deal was done at $530/mt CFR, but most sources believe that sellers have just exited the market due to the holiday. Vietnamese market participants have been because of Tet. Thailand and Singapore will also be out for short holidays until Tuesday last week. In Indonesia, the latest deal for Dexin billet has been reported at $540-545/mt CFR. Though this price has been assessed as being relatively high, buyers have limited cheap options at the moment. Taking into account the tenders at higher price levels held by Iranian mills, market sources are waiting for new offers from Iran to Southeast Asia at $535-540/mt CFR at the lowest, while bids have been at $520-525/mt CFR at the highest.

Iranian billet prices have surpassed $500/mt FOB for exports in the most recent sale, although the majority of market players assume such a level is too high for the current market realities. According to sources, one of the main producers has traded 30,000 mt of prime billet at $510/mt FOB, while the previous confirmed transaction had been concluded at slightly above $490/mt FOB. Market players assume the cargo will be directed to East Africa, particularly to Kenya, where buyers have been showing interest in imports recently. In Asia, bids for Iranian billet are still not above $520-525/mt CFR, which means around $490/mt FOB, and can be valid only for previously taken positions. The new offers are expected to be at $535-540/mt CFR, but such levels are not yet seen to be feasible. In Turkey, the import billet offer level from Iran remains at $525-530/mt DAP Karabuk, while bids are around $10/mt lower.

Offers from a number of Russian steel producers have been at $523-527/mt FOB Black Sea this week, down from the targeted levels of $525-540/mt FOB last week. However, as bids have dropped again in major sales destinations, market activity is at a standstill. The workable price in the market has been at $518-520/mt FOB Black Sea at the highest, which is somewhere in the middle between the current offers and bids. The support seen last week from the Egyptian market has faded away. The sharp fluctuations in the unofficial rates of the local currency in Egypt has led to a drop in domestic steel prices this week, and most market sources see imports as being very risky now. Offers from traders, who took positions earlier at higher levels, have been voiced at $565-575/mt CFR. But bids have dropped again by $10/mt over the past week to $550-555/mt CFR at the highest, which is in line with the deal prices in the import market before the hike seen last week.

In Turkey, the import billet market has been in a lull this week and buyers have mainly remained inactive with just a few inquiries reported. Some producers had restocked earlier and would like to wait and see the scrap and rebar price trends. In the meantime, billet availability is not plentiful, although the situation cannot be described as a billet deficit. The price indications for ex-Russia and ex-Donbass billet have retreated to $545-550/mt CFR in most cases, although the higher levels have also been available. Ex-Asia billet, particularly ex-Indonesia and ex-India position cargoes, has been offered at $560-565/mt CFR, slightly below last week’s levels. Similar prices can be achieved for an Algerian billet cargo, which has been offered to the market by a trader. There has been a talk in the market regarding an ex-Malaysia 15,000-20,000 mt billet transaction at $570-575/mt CFR, which is reported to have been booked along with slabs from the same supplier. However, the information was not fully confirmed by the time of publication. In the domestic market, trading has been mainly stalled, with price levels estimated at $585-600/mt ex-works, based on the current production cost calculations.

Ex-India billet offer prices have been quoted in the range of $515-520/mt FOB, down from $525/mt FOB at the lowest last week, as more mills have been heard to be submitting export offers after local prices slumped to a three-year low. However, actual trades were reported at even lower levels of $505-510/mt FOB, compared to $520-525/mt FOB a week ago. An Odisha-based mill has reported a deal to an Asian trader at $505/mt FOB and another smaller tonnage was for delivery to the UAE at $510/mt FOB, the sources said. A mill belonging to Steel Authority of India Limited (SAIL) located in the east held a tender for 20,000 mt with the highest bid received from a Hong Kong-based trading firm reported in the range of $505-510/mt FOB.

* - deal prices