Global View on Billet: Market at crossroads as Asian mills remain bullish, MENA unable to follow

The trend in the global billet market has been uneven this week as Asian suppliers have still been insisting on increases, while the market has been at a standstill in the MENA region and buyers in most major sales destinations have been resisting increases.

Billet producers in the ASEAN region increased their official export offer prices in the middle of this week up to $520/mt FOB, from $500/mt FOB last week, following news that export cargoes from China will be inspected more severely to limit non-VAT exports from the country. And even though this news affects HRC exporters more, ASEAN-based mills have taken this as one reason to increase prices. But unlike in previous rounds of bookings, when the mill was increasing offers after achieving higher deal prices, this week the rises have been based more on expectations and developments in China. The latest deal for ex-Indonesia 3SP billet was signed at $500/mt FOB late last week (only slightly up from $490-495/mt FOB deals for the same grade earlier), and since then no new contracts have been disclosed. Some large traders believe that $520/mt FOB is just voiced officially, while in reality from case to case the producer will agree on $510/mt FOB. Offers from Malaysia increased from $500-505/mt FOB last week to $510/mt FOB on Wednesday, and market sources are not excluding further increases if some previous hikes are accepted by buyers.

Ex-China indicative 3SP reference prices are stable at $500-510/mt FOB. News reports about inspections of steel cargoes for export at a number of large Chinese ports have emerged this week and market sources are widely discussing the possibility of the limitation of non-VAT trading from China in the near future. Though this should theoretically push offer prices from China up and impact other suppliers, especially in the HRC and longs segments, for now low prices from China still exist. However, the recent news has caused other suppliers, from Asia in particular, to be bullish.

Offers for 5SP billet in Southeast Asia’s import market have been reported at $520-525/mt CFR Manila for June-July shipment, while some sources have reported offers for the same grade at up to $540/mt CFR, which, however, have been assessed as too high for the current market. Offers have gained around $10/mt from last week. Customers in the Philippines see the tradable level as still being not above $510/mt CFR, so they have been staying out of the market. Also, an offer for 5SP billet from the Thai EAF producer has been reported at $515-520/mt CFR to Indonesia. In Taiwan, a deal for ex-Japan 3SP base billet has been reported at $510/mt CFR, up by $5/mt from the previous general offers in the market. About ten days ago, a deal from Russia’s Far East region was done at $500/mt CFR, after which the seller increased its offer to $505/mt CFR and then up to $515/mt CFR lately.

Large Turkish buyers have been relaxed in terms of new purchases this week, having booked several cargoes in the first half of April. In particular, most of them were traded at $515-525/mt CFR from Asia, while lower levels had also been reported in the market. The latest offers from Asia have increased to $540-545/mt CFR Turkey, which is in theory workable for buyers, but there are not great requirements at least for now. Along with Asia, Ukraine has been offering cargoes for June production at $545-550/mt CFR, with no deals reported just yet.

In the local market, Kardemir has traded around 65,000 mt of billet in its sales opened at $545/mt ex-works for S235JR and at $565/mt ex-works for B420 billet, while market players’ initial expectations were at around $550-555/mt ex-works. Other billet mills in Turkey have been offering at a minimum of $565-580/mt ex-works, SteelOrbis reported. Kardemir’s move has dampened the earlier optimistic mood in the import segment somewhat and billet suppliers from Russia and Donbass now agree that $525/mt CFR could be the highest reachable level, while offers for end-of-May shipments stand at $525-530/mt CFR and for prompt cargoes are at $540/mt CFR. With the weaker market sentiment, the SteelOrbis daily reference price for ex-Russia billet has decreased by $2.5/mt from the previous day to $500-505/mt FOB.

The Iranian billet market has been rather quiet this week in terms of export sales, though a couple of mills have launched new tenders. One of the leading producers is aiming to sell 20,000-50,000 mt of billet for mid-June shipment, while another producer is offering a 20,000 mt cargo for June shipment. The latest deal from Iran was closed at $471/mt FOB and in the new round of deals, despite mills’ optimistic expectations, market players foresee the workable levels being not higher than $460-465/mt FOB, while some even anticipate $450/mt FOB. Induction furnace billets are available at much cheaper levels: a small cargo has been sold this week to Pakistan at $430/mt FOB, while bids from North Africa have been reported at $425/mt FOB.

Ex-India billet offers have been submitted in the range of $500-520/mt FOB depending on the mill. The sources said that local private mills have been “testing market conditions overseas” by quoting higher prices, taking their cue from the hardening of ex-China prices in the Asian region. Also, the mills could reject lower offers against the backdrop of brisk merchant sales in the local market, riding on the back of robust long product prices. One eastern region-based mill reported a spot export trade for 15,000 billet with an Asian trading firm at $502/mt FOB, with some sources believing this is IF material. Another mill reported a trade for 20,000 mt for the Middle East at $505/mt FOB, though this could not be confirmed by the time of publication.

* - last deal prices