Global View on Billet: Prices mainly correct down just before year end, but further retreat doubtful

Billet prices have corrected down in most major markets this week, though some rebound has been seen in China by the end of the week. Poor demand ahead of holidays together with firm supply have triggered decrease after weeks of the uptrend. However, high raw material prices and holiday lull may prevent prices from visible drop further.

Offer prices from the main Indonesian billet supplier have declined this week as the producer has only concluded limited sales at higher prices and the negative effect from the slowdown in China early this week has been exerting pressure. Ex-Indonesia 3SP offer billet prices have been reported at $525/mt FOB, down by $10/mt since last week. Market sources are arguing about the allocation that the mill still has. Some said that the mill is officially indicating only February shipment and part of it has already been sold out. But some sources said that they are still able to get small allocations for January shipment, of around 10,000-20,000 mt. It is possible to get a price below $520/mt FOB at the moment, while the highest deal reported last week was at $525/mt FOB to distant markets like Latin America and Africa.

Ex-China 3SP reference price has lost $10/mt to $525/mt FOB on average due to demand slowdown in the local market and decline in local quotes early in the week. However, steel and raw material futures in China have rebounded on Thursday-Friday amid expected steel production control measures to return in Tangshan and banking interest rates cut rumors. Together with hike in raw material prices like iron ore, which touched $140/mt CFR today, this warmed moods in the Asian market to some extent. 

Prices for billets in the Southeast Asian import market have increased by the end of this week, despite low trading activity in the region ahead of holidays as suppliers have seen very high raw material prices. Offers for 5SP EAF/BOF billet have gone up to $538-545/mt CFR Manila, up from the latest deal for such grade at $530/mt CFR and offers at $530-535/mt CFR last week. Nevertheless, activity in the market has fallen almost to zero with the tradable level being still at $525-530/mt CFR.

Two major Russian mills, shipping from Far Eastern ports, are having a limited billet export allocation at the moment, as they have been sold out for January. The latest deal for ex-Far East Russia vanadium-added billet has been done to Taiwan at $540/mt CFR for January shipment. New offers for base 3SP billet to Taiwan from other mill have been at $530/mt CFR, up by $5-10/mt from the deals done at this destination earlier this month.

The SteelObris reference price for ex-Russia billet has been settled at $500-510/mt FOB, down by $8.5/mt over the week, due to absence of interest in buying in Turkey and weaker local sales in Russia. News about sales to Egypt have emerged this week. In particular, 20,000-25,000 mt of ex-Russia billet have been rumored to be sold at $550/mt CFR for the second half of January shipment, which is equivalent to $510/mt on FOB basis. However, some sources claimed this was mainly for wire rod grade billet.

No new deals have been reported in the import billet market in Turkey as many customers have restocked in the previous weeks with various origins. The outlook for the billet prices for now is slightly negative, taking into account the scrap segment being under big pressure now. By the end of the week the tradable level for ex-Russia billet in Turkey has been hardly above $530-535/mt CFR. One deal for 20,000 mt has been rumored at $532/mt CFR Iskenderun, though some sources believe it is Iranian origin. Some of the position volumes of Iranian billet have been on offer at around $540/mt CFR for 10,000-15,000 mt early in the week. However, according to the market information, a similar tonnage has been booked at $530/mt DAP in the Iskenderun region of Turkey for prompt deliveries, while earlier the price for such cargoes was at $515/mt DAP maximum. Though ex-Asia offers declined on FOB basis this week, they are not considered workable due to the increased freights and long lead time, which implies around mid-March delivery. Some of the Turkish mills have reported offers from Indonesia at $560/mt CFR. In addition, there are offers from the MENA region. Ex-Algeria and ex-Saudi Arabia billet is on offer at $550-562/mt CFR and up to $565/mt CFR, while the previous deals for these origins were at $555-560/mt CFR. But worsening moods have led to the tradable level for non-CIS material slipping to $550/mt CFR as the highest by the end of the week.

Ex-Iran billet remains dull and only one tender has been floated recently for 30,000 mt prime billet and for January shipment. The estimated price is at $480-485/mt FOB, slightly up from the previously closed sale. In Turkey, a 10,000 mt deal has been reported at $530/mt DAP, which is considered to be on the high side. Offers to the GCC have been reported at $515-520/mt CFR, while to Jordan at $520/mt CFR.

Ex-India billet prices declined this week on year-end considerations. Offers were submitted in the range of $520-530/mt FOB, but the tradable levels and rare deals were largely at as low as $510-518/mt FOB, indicating $10-12/mt drop from the reference price of last week. One seller was floating a fresh export tender for 30,000 mt of 150 mm billet for February shipment, but expectations of bids are now low in the range of $510-515/mt FOB, compared to a highest bid heard at $528/mt FOB earlier in the month. An Odisha based integrated mill reported a trade for 15,000 mt for Hong Kong trader at $512/mt FOB and another tonnage to a Singapore buyer for onward sales at $518/mt FOB.