Global View on Billet: Billet price fluctuations limited amid negative scrap, uncertain China

Billet prices globally have posted minimal fluctuations this week and overall trading has been reduced as scrap quotations have declined in the Turkish market and despite expectations China’s return from its short holiday has not been positive as expected. At the same time, the previous deals they had done and their good order books have made major billet suppliers somewhat less aggressive and they have mainly kept their prices stable.

Ex-Indonesia billet offers have been at $440/mt FOB for late November-December shipment, stable over the past week. No sizable deals have been heard lately as for most customers it has been too early to purchase, while also ex-Indonesia and ex-China prices are now at similar levels, so there is no reason to lower offers much to beat competitors. At the same time, an offer from an Malaysian mill has been officially heard at $465-470/mt FOB, being too high for the market. Market sources have said that for such markets as Turkey, where Malaysia is not subject to export duty, the tradable level could be equivalent to $450/mt FOB or so.

The ex-China 3SP billet reference price has lost $5/mt this week, coming to $435-445/mt FOB. There are no serious negotiations at the moment due to the absence of October shipment offers from major Chinese mills. By the end of the week, more offers have been heard at $430-435/mt FOB, but traders are waiting before concluding deals. The September market in China will be characterized by mixed conditions before the long holiday in early October, market sources believe. Also, after the previous sales of steel done by Chinese traders, a number of ports, especially in northern China, are facing congestion.

Offers for 5SP billet in the Philippines have been at $460-465/mt CFR mainly. Although this is $5/mt lower than late last week, it is still higher than the previous deal at $450/mt CFR done around 10-14 days back. Offers for Chinese 3SP billets have been at $452/mt CFR Taiwan, while ex-Russia materials have been available at $455/mt CFR. In the previous round of bookings, buyers in Taiwan had achieved $430-435/mt CFR. Though the Chinese market reopened somewhat negatively on Wednesday after its short holiday, market sources believe that prices will stabilize at the current levels.

Billet buyers in the Turkish market have been checking the most recent offers more actively, aiming to evaluate the market situation following the holiday in China. The latest billet indications for Chinese billet, offered to Turkey by traders, are reported at $485-490/mt CFR, up $10/mt from the end of last week. Sources report that the biggest barrier in working with China for billet now is the lead time, which has increased due to congestion at ports. Indonesian billet, offered as well at around $485/mt CFR, also attracts low interest in Turkey since it is for end-of-November shipment. However, an ex-Malaysia cargo which, according to market sources, has been on offer for end-of-October shipment at around $485-490/mt CFR, may gain acceptance in Turkey since it is the earliest available cargo of those currently offered.

Domestic prices for billet in Turkey are estimated at $530-550/mt ex-works, in line with last week. The latest deals, aside from local producer Kardemir’s sales, according to sources, have been concluded in the Iskenderun region for less than 10,000 mt at slightly below $550/mt ex-works. Turkey’s own billet production costs from steel scrap are still at around $530/mt, but the price idea for import billet workable levels is lower than $490/mt CFR.

There have been rumors about sizable sales of ex-Russia or ex-Donbass billets to Turkey recently. Initial rumors were at $463/mt CFR for 50,000 mt, but they have been denied by the main sellers of Russian materials. Later, some market sources said that for over 20,000 mt the price has been discussed at $473-475/mt CFR, so if the deal is done, this level is more reasonable. This price translates to around $455/mt on FOB Black Sea basis. One of the Turkish mills has confirmed that the latest deal for a small volume for October shipment was done at $480/mt CFR TBS late last week, while offers were at $485/mt CFR.

In Iran, several semis export tenders have been launched this week, with one of them ending with the sale of 30,000 mt of billet for October delivery. The short lead time is considered to be the reason for the price being on the higher side, at $454/mt FOB. The previous deal was closed around 10 days ago at $452/mt FOB and globally billet prices have been weak since then. In addition to the mentioned deal, two tenders have been floated by Khouzestan Steel Company, each for 20,000-50,000 mt of slab and billet and each for November shipment. Taking into account the situation in China, the workable billet prices from Iran are considered to be at $445-450/mt FOB, but acceptance may only be seen in the GCC and in East Africa.

Ex-India billet prices have remained stable at $450/mt FOB over the past week, but the mood among sellers has improved further as bids have continued to increase gradually. In particular, the sources said that improved deal levels have continued to prompt large mills to push higher volumes of semis for overseas sales as local market conditions have remained moribund. This was indicated by a government mill which held an export tender for 30,000 mt and got a highest bid at $452/mt FOB, slightly higher than $449/mt FOB for a similar tonnage in the previous week. Although the difference in price was not very much, it indicated that the market had possibly bottomed out with the recovery seen in China, while higher prices were being accepted in Asia and the Middle East.