Global View on Billet: Suppliers insist on higher prices with some increase in demand, fundamentals weak

The global billet market has posted some improvements this week amid rises seen in the Chinese market and a lack of cheap options observed in the market in general. Also, some traders and end-users have been more eager to buy after a long pause. However, many other fundamentals like scrap pricing and longer-term demand are still seen to be preventing prices from recording any significant hikes.

The official offer price for ex-Indonesia billet has been reported at $505/mt FOB since Wednesday, up by $5/mt from the earlier level. Around 20,000 mt of 3SP billet from the main Indonesian mill have been traded at $497-498/mt FOB this week, versus the $495/mt FOB deal done late last week and $490-493/mt FOB contracts reported in the first half of last week. Though Chinese traders have been eager to take positions and have agreed on some slight price increase, the relatively limited sales volumes reported so far signal that the confidence in the uptrend lacs strength.

The ex-China reference price has increased by $5/mt on average over the past week to $510-515/mt FOB amid increases by RMB 60/mt ($8/mt) in local ex-warehouse prices. The recent rebound has been explained mainly by better expectations amid a number of stimulus measures to support the real estate market, rising futures prices and higher iron ore prices. However, “In reality demand for steel] is weaker than the strong forecast, so prices will fluctuate, I think,” a Chinese trader said on Friday.

In the import billet market in the Philippines, some market sources report relatively stable offers for 5SP billet at $520-525/mt CFR and the tradable level is at around $520/mt CFR. Of the 35,000 mt of Indonesian billet bought in a position by a trader at the lowest price level last week, 25,000 mt are for the market in the Philippines, according to sources. The price is estimated at $515-520/mt CFR. However, some importers in Southeast Asia have reported higher offers already being voiced by some traders for BOF material at $525-530/mt CFR to the Philippines and Indonesia. Offers for ex-Iran billet to Thailand are at $510/mt CFR, relatively stable from last week. Traders’ offers in short positions are still at $515/mt CFR or slightly above, as market sources believe that the latest uptrend will be short-lived.

In Turkey, some interest has been seen in non-Black Sea origins and buyers have managed to push for rather attractive prices, citing low rebar sales and weak scrap prices. As a result, one mill has purchased 55,000 mt of billet from Indonesia at $528/mt CFR from an old position and at least 30,000 mt from Algeria at $526/mt CFR from a position freshly taken by the trader. Some of the Algerian material is still available in the market, although sources expect it will be hard at first for the suppliers to sell at a level higher than that in the mentioned deal.

As for Russia and Donbass, small sales have been rumored at $515-517/mt CFR but were denied by some of the supposed sellers. The bids have been at $517/mt CFR, versus $520-525/mt CFR indications for June-July shipments, while prompt cargoes have been on offer at $525/mt CFR. In Egypt, ex-Russia billet prices are estimated at $540-545/mt CFR with no fresh deals reported given the huge stocks which have already accumulated at ports. The SteelOrbis reference price for ex-Russia billet has increased by $2.5/mt over the past week to $495-500/mt FOB Black Sea.

Iranian billet export activity has been quiet this week in terms of mills’ tenders, and the workable levels have remained largely unchanged. The latest prices stand at $475-480/mt FOB for June shipments. In Asia, traders have been offering at $510-515/mt CFR, almost in line with last week's levels. In the GCC, the indicative offers are at $495-505/mt CFR still, but buyers’ expectations are downward, following the recent rebar price drop in the UAE. In the domestic market in Iran, one mill has traded 45,000 mt of billet at the IME at IRR 24,000/kg, which is around $380/mt according to the current market exchange rate. 

The reference price for ex-India billet has increased by $5-10/mt on average over the past week to $505-510/mt FOB. Offers from large mills are still at $520-530/mt FOB, but no sub-$500/mt FOB offers have been heard, unlike in earlier weeks. Still, the number of successful deals has remained very low amid the conflicting pulls of buyers expecting that sellers will not be able to sustain higher prices and local mills’ hopes of a better market for semis led by improved sentiments in China. The sources said that, even while a large government mill, generally the most active exporter of semis, has remained out of the market, one large Odisha-based mill reported a spot sale for delivery to the Gulf at $505/mt FOB. 

*- latest deal prices