Global View on Billet: Uptrend accelerates again, strong support from raw materials

The global billet market has resumed a strong uptrend this week almost everywhere as scrap prices have surged in Turkey and as sentiments in China have become positive again after significant rises in futures prices as well as in prices of raw materials like iron ore. 

Major ASEAN mills decided to hike billet offers twice this week or have withdrawn offers entirely by the end of the week, as they have managed to sell large volumes of steel products over the past week and their unsold allocation for January shipment is very limited now. New offers for ex-Indonesia 3SP billet have added $10/mt on Friday to $535/mt FOB, which is $15-20/mt above that seen last week. The latest deals were at $508/mt FOB last week for 50,000 mt of billets for the Turkish market, while early this week sales were done at $510/mt FOB and $515/mt FOB for traders. The Indonesian producer has managed to achieve better prices and sales volumes of slabs with up to 150,000-180,000 mt of slabs alone traded to different sales destinations since last week. Also, up to 180,000 mt of ex-Malaysia slabs have been sold to export markets over the past few weeks. 

Average spot billet prices in China have increased to RMB 3,753/mt ex-warehouse on Friday, up by RMB 45/mt ($6/mt) over the past week, mainly amid strong futures price rises over the past two days. The reference billet export price from China is standing at $535-540/mt FOB now, up by $7.5/mt over the past week. 

Sentiment in the Southeast Asian billet market has also become more positive again. Offers for ex-ASEAN EAF/BOF 130 mm 5SP billet have been reported at $535-540/mt CFR, up by $5/mt from the lowest levels reported last week. At the same time, the highest tradable level has been assessed at $530/mt CFR, versus $520-525/mt CFR last week. There has been a rumor about a Malaysian billet sale at this level, though a few market sources believe that two deals have already been signed as no cheaper options for 5SP EAF/BOF billet were seen in the market. There has not been much cheap Iranian billet available in the market and the latest offers have been voiced at $510-515/mt CFR Indonesia and Thailand.

In Turkey, there has been some decent domestic billet market activity as some buyers have preferred to restock while scrap has been rising along with import billet offers. Although the uptrend in scrap might slow down for now since many cargoes are already booked, there is a clear belief that the market for steel is set to remain high for now. Taking into account the lack of billet offers in some regions of Turkey and the scarcity of prompt shipment cargoes in the import segment, some considerable price rise has been accepted for domestic billet. While last week prices stood at $550-570/mt ex-works, this week Kardemir sold 58,000 mt at $559-569/mt ex-works depending on the grade. An Izmir-based producer booked 10,000 mt from the Marmara region at $572/mt delivered. In the Iskenderun region, 5,000 mt have been traded at $583/mt ex-works, followed by a sale reportedly done at $590/mt ex-works for 6,000 mt. Import offers from Asia have climbed to $555-560/mt CFR for end-of-January shipments, versus $545/mt CFR workable early last week. Billet from the MENA region, including the GCC, is at $560-565/mt CFR and there are offers for both prompt and end-of-January shipments.  

The SteelOrbis reference price for ex-Russia billet has increased to $515-520/mt FOB, up by $5/mt from yesterday and up $17.5/mt over the past week. By the end of the week, the lowest reported offer indications for both Russian and Donbass billet stand at $540-545/mt CFR, up from $530-535/mt CFR in earlier deals. There is a 20,000 mt allocation for prompt shipment in the market from one of the Russian mills and the price idea has jumped by $10/mt over the past couple of days to $550-555/mt CFR minimum. Another Russian mill has announced $520/mt FOB in offers, which is close to $550/mt CFR Turkey. Although no fresh deals for the mentioned origins have been reported, the workable level is believed to be not lower than $540/mt CFR at the moment. There may also be some activity in Egypt, where prices have climbed by $10-15/mt over the past week to $550-555/mt CFR. 

As for Iran, no active tenders or export sales of large volumes have been reported this week. However, traders have been offering their position cargoes to various destinations. While the ex-Iran FOB price remains at $464-472/mt FOB, offers to the GCC region, namely, Oman and the UAE, have been voiced at $490/mt CFR and slightly above. In Asia, the latest offers for Iranian billet have been reported at $510-515/mt CFR Indonesia and Thailand. Moreover, in Turkey’s Iskenderun region, 10,000 mt cargoes for January shipment have been mainly available at $510-515/mt CFR, while by truck prices are at $510/mt CPT. One small lot, according to sources, has changed hands at $507/mt CPT. In the local market in Iran, there has been some activity at the IME. One mill sold 30,000 mt of billet at IRR 19,300/kg or at around $470/mt, while another 20,000 mt have been traded at IRR 19,700/kg or $480/mt. According to sources, the exchange rate is at $1 = IRR 41,000 but for exporters it stands at $1 = IRR 50,000. 

Ex-India billet prices have softened slightly over the past week since, even though scrap prices in the global market have been on the rise and the mood in China is positive, the previously assessed billet prices from India were too high for the majority of customers. Sources said that the number of sellers in the market has increased over the past week, with private mills becoming more active, taking the lead from government-run steel companies. Ex-India billet tradable prices are in the range of $515-520/mt FOB, down by $5-10/mt over the past week. A government-run mill which held an export tender for 30,000 mt of 150 mm billet is heard to have received the highest bid of $518/mt FOB, down from the targeted level of over $520/mt FOB.

* - latest deal price