Global View on Billet: Some suppliers attempt price increases, but success very limited

Prices for billet have increased in some markets like the Asian one, following some gradual improvement in China in both spot steel and iron ore prices. However, buyers in the most sales destinations have not been ready for any higher prices, and some of them have even decreased bids, reflecting bad moods.

SteelOrbis reference price for ex-China billet has settled at $475-485/mt FOB for August shipment, up by $7.5/mt on average over the week, mainly due to the rise in futures prices and with iron ore prices coming above to $110/mt CFR again. Up to 80,000 mt of billet from China were sold at $471-473/mt FOB mainly in late June, but also with at least one deal done in early July. Most of the volumes are expected to go to end-users in neighbouring Southeast Asian countries. For instance, in addition to a deal to Indonesia for 20,000 mt of 3SP billet at $492/mt CFR, around 15,000 mt of the same grade changed hands at $497/mt CFR. Also, 5SP billet from China was traded at $503/mt CFR, with the tonnage totalling 20,000 mt.

A fresh deal for 30,000 mt of ex-Indonesia billet signed at $480/mt FOB for August shipment, while another contract has been rumored at $482/mt FOB, and offers have settled at $485/mt FOB. This indicates that the reference price for ex-ASEAN billets has dropped by $7.5/mt from the previous contract price level a week ago. At least half of the volume is for a long position, market sources said. Though prices have declined, for most market sources this is viewed as a correction to “a more reasonable level.” Traders believe that prices from the ASEAN region will be stable at this level in the near future or will increase again to $490/mt FOB, if the uptrend in China sustains.

Most buyers for billet in Southeast Asian import market are skeptical about a sustained price increase as some cheap offers from traders are still heard and there is no improvement in the fundamentals, with demand for longs still weak in Asia. The SteelOrbis reference price has increased to $497-505/mt CFR, with the midpoint at $501/mt CFR, up by $3.5/mt from last week. Offers for 5SP billet for open origin materials have been reported at $505/mt CFR Manila, while some offers for ex-ASEAN origin specifically have been at $507-510/mt CFR, up from $500/mt CFR at the lowest last week. Offers for 3SP billet to Thailand have been reported at $495/mt CFR, mainly for ex-China origin, up by $5/mt over the past week.

In the Turkish import billet market, prices have been relatively stable with ex-CIS material quoted at $510/mt CFR, and indicative price for ex-Asia billet is $520-525/mt CFR. A deal for 20,000-25,000 mt of ex-Ukraine billet were sold at $530/mt CFR to Turkey in the week before the last one, but at the moment bids from some customers have seen declines to as low as $500-505/mt CFR mainly due to the bad situation with the finished steel and rising costs with the recent increase in energy prices. In particular, from July, energy tariffs for residential buyers will increase by up to 38 percent, however, for steel producing companies the hikes are smaller – around 10 percent depending on the using time, according to steel mills.

Ex-Russia billet price has remained at $490/mt FOB Black Sea, though there have been seen a reduced number of offers in general in the market, and some of them have been at higher level of $500-505/mt FOB. Small volumes for ex-Belarus billet have changed hands at around $540/mt CFR in Egypt, including extras. This is almost stable from the previous import deal a week ago.

Ex-India prices have been stable at $475-490/mt FOB, but most firm bids confirmed in the market have been at levels lower by $5-7/mt or more. Sources said that a government-run mill which held a tender for 30,000 mt on June 27 is reported to have received a highest bid of $465/mt FOB, which was far below the target price of the level of $490/mt FOB at the lowest. One sale to a trading company was heard at $468/mt FOB, but this was not confirmed by the time of publication and could be only for IF billet, according to sources. Another government-run mill received a bid for 20,000 mt at $462/mt FOB, the sources said.