Global View on Billet: Stability spreads across markets, cautious optimism for post-holiday period

This week has been stable in terms of both pricing trends and buying activity in the global billet market, with the Chinese and Russian markets closed for holidays for most of the week. Cautious optimism has prevailed among market sources for the post-holiday period with some restocking expected in China, though most billet customers in the global market are unlikely to accept any sizable hikes.

Ex-Indonesia billet offers have been lowered by $10/mt over the past week to $510/mt FOB. A number of market sources agree that the previous official offers were “unreasonable”, being based on expectations and news regarding the non-VAT trade inspections in China. Accordingly, the decline is a correction to a more realistic market level. At least one deal for up to 30,000 mt of Indonesian billet for June shipment was done at $500/mt FOB early this week, stable from the previous booking reported last week. But at least one offer for 26,000 mt of billet from Malaysia has been heard at not below $520/mt FOB, with the targeted market being the Middle East, not Asia.

Ex-China 3 SP reference prices have been stable at $500-510/mt FOB, but they are still mainly indicative as traders and small mills have been choosing to sell locally if prices in the domestic and export markets are the same. The latest softening in futures prices and the pre-holiday mood in China also impacted the Asian billet market, but next week some slight rebound is not excluded amid restocking. Also, the market mood has been supported by news about government support of the real estate sector, such as Beijing’s relaxation of the rules on multiple home purchases after 13 years.

The SteelOrbis reference price in Southeast Asia’s import billet market, including 3SP and 5SP, has increased by $5/mt this week to $515-525/mt CFR, but buyers in Asia are bidding at $505-510/mt CFR maximum for 3SP and at $520/mt CFR at the highest possible for 5SP. Market sources have reported that there is a lack of old position cargoes taken by traders at below $500/mt FOB from ASEAN mills, and so 5SP billet offers to the Philippines are not below $525/mt CFR for Indonesian origin and are up to $540/mt CFR for Malaysian origin this week. Buyers are asking for $520/mt CFR maximum. Ex-Thailand 5SP EAF billet offers have increased to as much as $530/mt CFR Indonesia and $525-530/mt CFR Philippines, up by $10/mt over the past week, “which is not workable,” a Jakarta-based source said. A billet offer from Russia’s Far East region has been heard at $512/mt CFR Taiwan, more or less in line with that reported late last week, while bids have been below $510/mt CFR.

The Turkish billet market has been relatively quiet this week as buyers have been trying to assess the current trend. In the domestic market, despite a relatively stable scrap market, billet offers have weakened to $560-570/mt ex-works in the Izmir and Iskenderun regions, while the lower end is at $545/mt ex-works as per the latest Kardemir sales. On the import side, ex-Asia offers have increased by $5-10/mt to $545-555/mt CFR depending on the origin. These levels are not considered workable with rebar at $580-590/mt FOB, and Turkish mills are reported to be seeking to pay no higher than $530/mt CFR for billet of non-toxic origins.

Overall availability from Russia has been limited also due to the May Day holiday. Market sources said that the sellers will target $530/mt CFR Turkey from next week, translating to $505-510/mt FOB, while for the Egyptian market the targets are at $510/mt FOB and slightly above. Nevertheless, the acceptance of higher prices is questionable. There has been a rumor about a 10,000 mt sale to Turkey at $520/mt CFR last week, translating to $500/mt FOB or a few dollars below. Though this information could not be confirmed by the time of publication, market sources agree that last week the tradable level was at $520-525/mt CFR, while at the moment Turkish buyers will bid below this.

Iranian billet sales have been discussed this week at $475-480/mt FOB, which is higher than the earlier expected level of $470/mt FOB and below. In particular, two mills, according to sources, have traded billet at $478/mt FOB and $480/mt FOB, which is considered overpriced based on the current conditions. Sources believe that the prices could include some extras for the chemical composition or for specific delivery terms. Another supplier is negotiating 20,000 mt of billet at $475/mt FOB for June shipment. The new purchases have most probably been concluded by traders counting on better market conditions in Asia, where the latest ex-Iran deals for 30,000 mt to Indonesia were closed at $505/mt CFR, while the new offers are at $515/mt CFR. In the GCC and Turkey, offers are at $500/mt CFR and $510/mt delivered, respectively, with no fresh sales reported.

The tradable level for ex-India billet has slipped by $10/mt on average over the past week to $495-505/mt FOB as bids from the major destinations have declined and exporting mills have been focusing on local sales. The sources said that buying interest in major destinations like Southeast Asia and the Middle East has not been enough to support the previous price increases and so a correction has been necessary. According to sources, an Indian government mill held an export tender for 30,000 mt on April 29 and it received the highest bid from a Middle East-based buyer at $505/mt FOB, lower than the expected $515-520/mt FOB.

* - last deal prices