Global View on Billet: Market moves slowly on negative trajectory

Billet prices have posted some gradual declines almost in all major markets this week, even though the price movements have been very slow. For the near future, market sources expect the trend to be from stable to still slightly negative.

The official offer price for ex-Indonesia billet has remained stable since late last week at $505/mt FOB, but most market participants agree that the mill is ready for $5/mt discounts and that it is holding its offers stable only in order not to give a signal to the market that the mood has changed to bearish. Late last week, around 10,000-20,000 mt of Indonesian billet were sold at $500/mt FOB, up by $2/mt from the previously reported transactions. However, early this week another 30,000 mt batch from the same mill changed hands at $498/mt FOB, signaling that the market is stable. Some of the mentioned deals done on FOB basis are to cover the previous short position sales by traders. One more deal has been heard at $495/mt FOB late this week. In addition, at least 30,000 mt of ex-Vietnam billet were sold to a trader at $495/mt FOB late last week. Some market sources said that at the moment the Vietnamese mill does not have July shipment allocation, so in total it has traded 50,000 mt, but the rest of the volume was at a slightly higher level. Initially, the offers from Vietnam were at $500-505/mt FOB, but the mill has decided not to wait longer, seeing not such a positive mood in China.

A deal for 20,000 mt of ex-Indonesia 5SP billet has been closed at $525/mt CFR Philippines, as the main buyer in the country has needed to purchase and there has been a lack of offers for 5SP. Also, another deal for around 10,000 mt of ex-Japan billet has been reported at $520/mt CFR, also to the Philippines, while the seller has been offering this cargo to different buyers in Southeast Asia at $522-525/mt CFR for around a week. One of the traders said that buyers from the Philippines were targeting $515/mt CFR for quite a long time, but failed to get it, so the price in fact has not increased, it is “just higher than they [buyers] wanted,” he said. Also, another deal for 20,000 mt of 3SP 150 mm Indonesian billet has been heard at $515/mt CFR to Thailand. Another market source from Thailand has also heard about this deal and assessed it as being a fairly low level for the seller. Early this week, a trader offered 3SP Indonesian billet to the local market at $520/mt CFR.

In the domestic market in Turkey, integrated producer Kardemir has announced $545/mt and $560/mt ex-works for billet depending on the steel grade, which is $5/mt lower than the previous price. According to local sources, Kardemir has managed to trade at least 20,000 mt of billet, while others report the total tonnage is almost 27,000 mt. In the Iskenderun region, prices may be higher [$560-565/mt] for a while, since, due to Bastug's absence, supply over there is less now. Import offers for Algerian and Indonesian billet in Turkey are at around $535/mt CFR, while the targets of buyers are below $530/mt CFR. As a result, market sources expect that the available Algerian billet allocation, which is assessed at around 50,000 mt for now in traders’ positions, is expected to be sold at quite good prices, given the advantage of the shorter lead times and better freight rates. In the meantime, the availability of ex-Black Sea billet, particularly from Russia and the occupied territory of Donbass, is limited.

The SteelOrbis reference price for ex-Russia billet has corrected down again - to $490-495/mt FOB Black Sea, losing $5/mt this week. A few more deals have been rumored from the CIS to Turkey. One sale for 3,000 mt of ex-Belarus material has been rumored at $517/mt CFR, while another one for a larger volume has been heard at $520/mt CFR Aliaga for end-of-July shipment. Neither of the rumored exporters confirmed the information but said that this is the current market level. According to some sources, a contract price of $520/mt CFR included some extras. Also, information about a 10,000 mt deal for wire rod grade billet done last week was disclosed lately, at $528/mt CFR, while the base price is equivalent to not above $520/mt CFR.

In Egypt, some negotiations continue with potential buyers even though billet stocks in this market are rather high at present. According to sources, ex-Ukraine offers are at $560/mt CFR effective, while Asian material is priced at around $550-555/mt CFR. As for ex-Russia offers, they are evaluated at $540/mt CFR and slightly below.

Iranian billet exports have been rather slow lately, mainly due to the weak markets in the key consuming destinations. The latest workable levels have remained at $475-480/mt FOB according to the previous sales, while there was one tender for 30,000 mt announced recently and many believe the supplier will find it hard to avoid discounts. In Asia, the realistic price for ex-Iran billet is evaluated at $505-510/mt CFR, with around $40-45/mt freight. In the GCC, buyers are bidding at below $490/mt CFR versus most offers from traders at $500-510/mt CFR and above.

The reference price for Indian billet has remained at $505-510/mt FOB, while official offers from large mills are still at $520-530/mt FOB. A government-run mill has reported a bid for 20,000 mt from a trading firm at $505/mt FOB. Also, a private mill was in negotiations for 30,000 mt for the MENA region at $510/mt FOB, though the price was assessed as being on the high side for the current market.  In addition, another eastern India-based integrated mill has been ready to sell 20,000 mt of billet to Asia at $505/mt FOB, the sources said.