Global View on Billet: Bullish moods start to fade away, but no trend reversal so far

The uptrend moods in the global billet market have eased this week with stable scrap prices, some slowdown in China and more cautious buying activity. However, it is still too early to say that the uptrend has been reversed as a number of sellers are still optimistic and are assessing the current developments as a correction only.

Ex-ASEAN billet deal prices have continued to rise lately as traders have been taking positions, but the latest offer prices voiced by ASEAN-based mills last Friday have not been achieved and it is far from the tradable prices in Asia with the recent futures drops in China. Offers for ex-Indonesia billet have remained at $535/mt FOB this week, after the hike by $10/mt last Friday. At the same time, market sources have reported that the latest deals have been closed at $525/mt FOB to traders preparing for future sales to Latin America and Africa. A rumor about a sale at $535/mt FOB by the Indonesian mill to the local market has been disproved by a number of sources.

The ex-China 3SP billet reference price increased to $535-540/mt FOB early in the week, but then returned to $530-540/mt FOB and some market sources said $525/mt FOB is achievable. After a sudden softening of futures and spot prices in China since Wednesday due to disappointing news from the recently concluded Central Economic Council, the moods have been weaker in the Chinese billet market. Also, coming colder weather has been one of the reason for worse expectations.

The SteelOrbis reference price for imported billet (3SP and 5SP) has settled at $523-530/mt CFR, versus $530/mt CFR last week. A deal for ex-Indonesia 5SP billet by a trader was rumored to the Philippines at $530/mt CFR early this week, in line with similar quality billet sales last week. Offers for 5SP EAF/BOF billets have also been stable at $535-540/mt CFR. Indonesian 3SP billet, which is less popular in the Philippines, has already been sold at below $525/mt CFR Manila. Fresh offers for ex-Malaysia 5SP IF billet has been at $523/mt CFR. Most deals recently have been from traders who took positions from ASEAN mills when prices were at $510-515/mt FOB.

Russian suppliers have managed to sell billet at higher prices in the Asian region, as there has been a lack of cheaper options for buyers with the limited availability of Iranian supply. The latest deals for ex-Far East Russian billet have been reported at $520-525/mt CFR Taiwan for February-early Marsh shipment, up by $5/mt from the previous offers reported last week and far above a deal at $510/mt CFR done around two weeks ago. Another mill based in Russia’s Far East region is still targeting sales to the Philippines.

Iranian export billet prices have increased in the recently closed tender, despite that the global optimism regarding the uptrend for semi-finished products has started to cool off. In Asia, the moods are affected by the Chinese situation and, despite the mills are well sold out for billet and have increased the prices recently, the trend might be affected in a negative way. In Turkey, the import scrap prices have stopped rising, following the active buying, and the most recent bids for the remaining required cargoes have dropped substantially. However, an Iranian mill managed to sell 30,000 mt of billet for early January delivery at $480/mt FOB, while the previous deals from Iran had been closed at $464-472/mt FOB for the similar lead time around two weeks back. The increased prices for billet in the domestic market are considered to be the main reason, which is due to the winter season and potential issues with the energy supplies to the industrial sector. The latest offers to the GCC region for Iranian billet stood at $490-500/mt CFR, while in Asia the indications have been reported at up to $520/mt CFR.

The domestic billet prices in Turkey have remained high and some of the price levels have been accepted this week by the buyers. Although the current prices are not quite matching the workable levels for longs in Turkey, still some restocking with the domestic billet had to be done, particularly in the Karabuk region. Kardemir has managed to sell around 35,000 mt at $580-590/mt ex-works depending on the grade, which is $21/mt higher than the producer’s price a week ago. In the Iskenderun region, a small deal has been reported at $592/mt ex-works, while the past week ended with a $590/mt ex-works in the same area. In the Izmir and Iskenderun regions the offers are expected to hit $600/mt ex-works, but will be hardly digested by the local buyers.

In the import segment, the customers from the Karabuk region have booked a total of 20,000 mt of Russian billet from $538/mt to $545/mt CFR mainly for early January delivery. In the past week, the deals were closed for Donbass or Russian origins at $530-535/mt CFR. The new offers have been mainly reported at $540-545/mt CFR still while it seems that the higher targeted levels will not be achieved in this round. The import scrap price uptrend has slowed down and might come to an end shortly, therefore the buyers’ bids for billets have also rolled back. After Kardemir sales, some of the re-rollers voiced their price idea for imports as not above $530/mt CFR. The SteelOrbis daily reference price for ex-Russia billet has settled this week at $512-515/mt FOB versus $515-520/mt FOB earlier. Aside from Turkey, Russia’s offers to Egypt have been reported at $550-555/mt CFR with no fresh deals heard.

The reference price for ex-India billet has settled at $522-528/mt FOB, versus $515-520/mt FOB last week. However, a number of offers have been quoted at higher levels of $540-550/mt FOB. The sources said that a government-run mill received the highest bid of $528/mt FOB in its latest tender, up from $518/mt FOB heard last week. An Odisha-based integrated mill has reported a sale to the Asian market at $522/mt FOB. Local billet prices in India have also improved – by INR 400-500/mt ($5-6/mt).

* - latest deal price