Global View on Billet: Better sentiments, suppliers fail to achieve higher deal prices so far

The situation in the global billet market has improved this week amid the revival of demand in China, and some slight increase in scrap prices. Suppliers have already started to attempt to increase prices, though they have failed to confirm increases in deals so far.

ASEAN mills have agreed to cut billet offers and have provided discounts to sign deals since last week sales were hindered due to high prices and the bigger gap with ex-China prices. But after major Indonesian producer Dexin Steel sold at least 50,000 mt at $490/mt FOB, market sources said that it will not accept prices below $500/mt FOB, and some traders have already received $505/mt FOB on Friday. Even though this is still below $510-515/mt FOB seen last week, it is a sign of better sentiments among sellers. Indonesian mill has sold out at least one third of its May shipment allocation. Also, ex-Vietnam billet offers have been reported at $500-505/mt FOB, declining by $10/mt from the previous deal for this origin.

The ex-China 3SP billet reference price has improved by $15/mt over the past week to $490-500/mt FOB, and so the gap with ASEAN prices has declined. A few traders have said that, following the low-priced deals done by Chinese traders last week, there have been no new trades at increased prices so far. Better demand in the local market and rising futures and iron ore prices have been the main reasons for the rebound.

In Southeast Asia’s import market, a deal for about 20,000 mt for ex-China 5SP billet was reported at $515/mt CFR to the Philippines late last week. And some more negotiations have been heard at $510-515/mt CFR, but with no confirmation of deals so far. A few traders have said that BOF-based sellers are mainly asking for $515/mt CFR Manila. Also, an offer for ex-ASEAN IF billet has been at $513/mt CFR to the Philippines, down by $7/mt over the past week. The lowest level for ex-China billet fixed in a deal was heard at $503/mt CFR to Indonesia last week, but this week offers have increased for 3SP billet from China to $510-515/mt CFR to both Indonesia and Thailand. Also, one deal for ex-Iran billets has been rumored to Thailand in the “early $500s/mt C&F,” which could be a short position sale. In Taiwan, ex-Far East Russia prices have slipped to $505-510/mt CFR, with some volumes sold.

In Turkey, local producer Kardemir has sold over 55,000 mt of square billet at $545-555/mt ex-works, depending on the steel grade, which is considered to be a low price compared to the mill’s earlier rebar sales at $608/mt ex-works. Such a development, on the one hand, has put a bit of a pressure on import offers, but on the other hand has brought some optimism to the market in terms of restarting business activity. In addition, the number of offers in the import market in Turkey is quite low and prices have even inched up over the past week. Russian and Donbass billet is now offered to Turkey at a minimum of $530-535/mt CFR, versus $515-520/mt CFR earlier, while some small sales for prompt shipments are reported to have been closed at $540/mt CFR and slightly above. Algerian origin billet has been sold to Turkey at around $535-540/mt CFR, while similar levels were targeted by buyers for ex-Ukraine billet. In fact, these two origins may be in demand in Turkey in the short run, given the long lead time for Asian billet and the necessity to buy the latter in large volumes. The latest indications for billet from Asia have been heard at around $540-550/mt CFR depending on the tonnage and freight, which does not attract much interest from Turkish buyers.

Export billet allocation from Russia, as mentioned earlier, has been scarce lately, mainly due to some demand in the domestic market and the seasonal construction improvement. In addition, local scrap prices have been moving up in Russia, making the export workable prices too low for the mills compared with their costs and the achievable domestic prices for billet. Lately, a total of 10,000 mt of Russian billet was sold to a trader for Egypt at $515/mt FOB and for prompt shipment, down $2/mt from the previous sale. The SteelOrbis reference price for ex-Russia billet has settled at $505-515/mt FOB, with the midpoint up by $5/mt to $510/mt FOB since late last week.

Indian billet export prices have softened over the past week amid pressure from slow demand and suppliers’ aim to increase sales volumes abroad. This week, prices have settled at $490-502/mt FOB, down $8/mt on the upper end of the range. The acceptable bid levels have also declined this week to below $500/mt FOB, particularly given the increased supply volumes for export. One mill, according to sources, received the highest bid for its 30,000 mt tender at $502/mt FOB, while another tender has lately been floated, again for 30,000 mt. Also, one of the Odisha-based mills is reported to have sold 15,000 mt of billet to a trader at $495/mt FOB, while another supplier from the east of the country has closed a deal at $500/mt FOB. The anticipated weakening of Indian domestic consumption is one of the main reasons for suppliers accepting lower export prices.