Global View on Billet: Uptrend fails to materialize after holiday, trading limited by lower bids

The global billet market has failed to improve after the Labor Day holiday since, even though China has made a slightly positive return from the holiday, buyers in the major sales destinations have not been ready for any price rises. Moreover, they have lowered their bids, considering that the market fundamentals are not so strong.

Ex-Indonesia official offer prices have remained at $510/mt FOB for June shipment. Prices for ex-ASEAN billet have remained stable this week and trading activity has been limited as producers in the region have not been in a hurry to push volumes, seeing some positive sentiments in China, while buyers have become more negative due to the recent softening of scrap prices. Last week, a deal for “a relatively small volume” was done at $500/mt FOB. This week, another deal for 10,000 mt is reported to have been done at the same level, confirming the stability of the market. Market sources said that the tradable level for ex-Malaysia billet would also hardly be above $500-505/mt FOB, though mills in Malaysia are not active in offering and are only giving indications at $510/mt FOB and above.

The ex-China billet reference price inched up by $2.5/mt on average in the first days after the holidays, but on Thursday, after a few days of softening futures prices, the price has come back to $500-510/mt FOB, the same as in late April. The local Chinese market has also been relatively stable and in general local ex-warehouse prices have gained only RMB 18/mt over the past week, as demand had not strengthened so much compared to before and production was still on the high side.

In Southeast Asia’s import market, offers for 5SP billet of Asian origin in the Philippines have remained at $525/mt CFR at the lowest from traders for BOF/EAF material and at least one offer was at $523/mt CFR on Thursday, while higher offers at $530-535/mt CFR are also heard but are considered to be unworkable. The lowest offers have been coming for ex-Malaysia IF billet at $520/mt CFR, and for ex-Vietnam IF there has been an offer at $525/mt CFR. Buyers have been asking for discounts and bids from Manila-based buyers have softened to $515/mt CFR.

In Turkey, ex-Asia billet lots have remained the most expensive, at $545-555/mt CFR for June shipments for origins including both Indonesia and Malaysia and these offers are not workable for buyers. According to evaluations, $530-535/mt CFR levels are the highest that Turkey can pay currently, which is not yet obtainable from suppliers. As a result, large Turkish producers are mainly expected to look at scrap purchases at present, while only some have booked billet from Russia, which is basically the only available source for large volumes at low prices due to the sanctions. As a result, around 30,000 mt of billet has been booked at $516/mt CFR Marmara. Smaller buyers have also preferred to deal for their regular lots for prompt shipments and have booked altogether 20,000 mt of billet at $525/mt CFR and $528-529/mt CFR Karabuk region from Russia. Other suppliers of Russian and Donbass material are targeting $525-530/mt CFR and it is expected that firm bids from Turkey may be received at not higher than $515-520/mt CFR. The SteelOrbis daily reference price for Russian billet has dropped by $5/mt over the past week to $495-500/mt FOB. In the domestic market in Turkey, the lowest prices have been reported in the Izmir region at $550-555/mt ex-works, most probably for the new production recently launched by one of the local mills. In the Iskenderun region, small sales have been closed at $560/mt ex-works, down $5-10/mt over the past week.

In the previous weeks, many suppliers from the Black Sea region were looking to Egypt in order to conclude sales, since customers there were paying higher prices than Turkey. The latest deal to Egypt, for up to 30,000 mt of billet, was closed last week at $555/mt CFR from Ukraine, while the general workable level is now assessed at around $545-555/mt CFR. However, sources expect that the Egyptian market will shortly cool off in terms of purchases, following the rather active import trade seen in past weeks and the stocks already built up at ports.

In Iran, no large export trades by steel producers via tenders have been reported this week, with only one sale at $478/mt FOB discussed in the market, but not confirmed by the time of publication. In the meantime, traders have been offering billets to Jordan at $495/mt CFR and to Pakistan at up to $460/mt CFR. Some billet buyers have placed bids at $440/mt FOB for EAF-origin material, while offers for IF quality billet have been at $420-440/mt FOB Bandar Abbas. In addition, in the domestic market one mill has traded 20,000 mt of billet at IRR 24,100/kg, while another 20,000 mt have been sold at IRR 24,300/kg and an additional 12,000 mt lot has been transacted at IRR 22,500/kg. One of the reasons for the more active sales in the local market is the government regulation stating that producers have to convert their US dollar-based export revenues into the local currency at the government rate of $1 = IRR 40,000, while the realistic exchange rate is at $1 = IRR 61,000. This condition, if strictly imposed, may impact Iran’s export presence in a fairly negative way.

Ex-India billet prices have increased to $510-515/mt FOB, up by $10-15/mt over the past week, mainly amid expectations for a market improvement and at least one deal being rumored, and some mills are now targeting even $520-530/mt FOB. According to the sources, a number of large mills have entered the export market over the past week and, according to industry sources, an estimated aggregate of (spot plus tenders) 100,000-150,000 mt of prime concast billet were put up on offer for overseas sales. This was led by a government-run mill which floated back-to-back export tenders for a total of 60,000 mt, which will be closed by May 14. Sources also said that a private mill reported closing a deal for 30,000 mt at $510/mt FOB, and, even though this has remained unconfirmed by the time of publication, this is an improvement on the highest bid at $505/mt FOB last week.

* - Prices in latest deals