Global View on Billet: Price declines gather momentum, though number of suppliers resist

Billet prices have continued to decrease in the global market this week and even at a faster pace in some destinations, as scrap prices have found a new bottom and demand has still not been supportive. However, a number of sellers like ASEAN mills, some Russian and Iranian suppliers has been resisting the downtrend and lowering offer volumes.

The ex-China reference price for 3SP billet has been lowered by $12.5/mt on average this week to $495-505/mt FOB with the latest correction down by $5/mt being done on Friday. News from National People's Congress have failed to support the market this week, and weak demand has been the major driver. On March 5, Chinese Premier Li Qiang delivered a report on the work of the Chinese government to the second session of the 14th National People's Congress, stating that China has set its growth target for gross domestic product (GDP) at five percent for 2024. In 2024, China will issue the ultra-long-term special treasury bonds in question amounting to a value of RMB 1.0 trillion ($0.14 trillion). However, stimuli measures news was not sufficient to excite the markets, and even though rumors about possible export duty on semis have been fluctuating since last week, exporters have been offering lower and lower prices to overseas customers. 

The main Indonesian mill started to offer May shipment billets this week, leaving prices stable at $520/mt FOB first, while voicing $515/mt FOB by the end of the week. But this has not been assessed by market sources as a downward correction as last week additional sales from the producer were made at $515/mt FOB, a similar level to the trades for over 100,000 mt of billet in the previous ten days. Out of the monthly allocation for exports of 300,000 mt minimum, a half has been sold now. That is why the seller is not in a hurry to cut billet prices.

Rumors about a deal for ex-Сhina 5SP 150 mm billet at $531/mt CFR Philippines late last week have been circulating in the market, and, though the information could not be confirmed by the time of publication, market sources believe that this level is hardly workable now. Also, some market sources believe that, if true, this deal was for Davao, where freight is up to $5/mt more expensive than to Manila. Buyers were bidding at $525/mt CFR for 130 mm. Early this week, offers from traders for Chinese origin 5SP 150 mm billets have been at $530/mt CFR to the Philippines, while ex-ASEAN 130 mm billet has been available at $535/mt CFR since last week. One Iranian cargo has been rumored as sold at $521/mt CFR Indonesia last week, there has been no confirmation if it was for a short position. 

The SteelOrbis reference price for ex-Russia billet has settled at $490-508/mt FOB Black Sea, down by $14.5/mt on average over the week. According to sources, one of the mills sold a small lot of 3,000 mt at $508/mt FOB for March shipment. However, bids from customers are at $500/mt FOB and below. Though some traders claim that they can achieve $520/mt CFR in Turkey and one producer has said it could sell at $525/mt CFR, a few importing mills have said that the real bids are at $500-510/mt CFR, which are equivalent to $480-490/mt FOB. The reason for such a sharp fall is the scrap going below $370/mt CFR in one ex-UK deals and reaching its new bottom at $376-381/mt CFR for ex-US cargoes. In this situation, offers for ex-Russia billets have been limited and the lowest that can be accepted by sellers is assessed at $500/mt FOB, though officially mills were at $510-520/mt FOB in offers.

Turkish billet market has been silent this week as market sources have been waiting for the scrap to settle first. Apart from Russia, prices for other origins in Turkey have also moved down. An offer for open origin Asian billet (Malaysia, Indonesia, China) has been heard at $540/mt CFR Turkey, down by $10-15/mt from the previous levels last week. Local prices in Turkey have corrected down by only $5/mt mainly because of extremely weak activity.

The tradable level for ex-India billet has declined by $10/mt to $505-515/mt FOB. A few market sources said that all prices above $505/mt FOB will hardly work late this week or early next week if the situation in China does not improve. A government-run mill floated an export tender for 30,000 mt of 150 mm billet recently with sources claiming the highest bid would hardly be above $505/mt FOB, considerably lower than $525/mt FOB received against an export tender for a similar tonnage which closed last month. An Odisha-based mill has confirmed a trade last week to an Asia-based trading firm at $515/mt FOB for early April shipment. In general, the interest in exports for steel mills has continued even though local billet prices have corrected slightly up.

The prices for ex-Iran billet have remained rather firm, despite the weak market situation in the key overseas outlets. The latest deals were closed in early March at $507/mt FOB and $510/mt FOB by Esfahan Steel Company, which was considered by most of the market players as a high price at the time. Yet another mill, Chadormalu Mining and Industrial Company has floated a 30,000 mt export billet tender, valid until March 12 and the expected price is around $490-495/mt FOB. In addition, adjusting the export duty from two percent to one percent for semi-finished and placing a zero sales tax for the same product category has brought some optimism to the sector. However, some sources report that the Iranian government is mulling adjusting some currency trade rules for exporters.