Global View on Billet: Bullish mood spreads across markets after China’s surge

Prices for billet in the international market have increased again this week, with the uptrend accelerating after China on September 30 unexpectedly hiked prices by much sharper margins than previously, before exiting the market for its week-long holiday. The outlook for next week is also positive.

On Monday, September 30, the last day before the long holiday in China, the steel market witnessed one of its sharpest price hikes in over a year. This happened after a fresh package of stimulus measures to support the real estate market was announced by the Chinese government on Sunday. The PBOC ordered banks to cut mortgage rates for existing home loans by not less than 30 basis points below the loan prime rate. This was assessed by market analysts as a strong measure to support homeowners and stimulate weak domestic consumption. Also, the PBOC will extend supportive measures for real estate developers, including trust loans, until the end of 2026, while three first-tier Chinese cities lifted restrictions on home purchases. Though these measures together with the cut in the RRR last Friday have been assessed as strong measures, the response of the steel market has been unexpectedly impressive. Local rebar prices in China surged by RMB 390/mt ($56/mt) on average on ex-warehouse basis on just a single day. In most of China’s export markets, trading halted following the sharp price increases. The ex-China reference price for billet rose by $17.5/mt on average to $480-490/mt FOB, with most offers at the higher end of the range.

The latest deal for around 20,000 mt of ex-Indonesia billet was done at $481/mt FOB for January shipment, also on September 30, according to sources. Some additional small volume is also heard to have been sold to a trader in the “low $480s/mt,” a source said. On Friday, a deal for 10,000-20,000 mt of billet was confirmed at $460-465/mt FOB. In general, prices rose by slightly over $30/mt compared to the previous confirmed deal in the middle of last week to $450/mt FOB. An offer from the Vietnamese mill for 3SP billet has been heard at $500/mt FOB, being so high also due to the closer shipment date, which is November. Market sources are waiting for new prices from Malaysia, but no new offers have been voiced after a deal at around $450-455/mt FOB was reported last week.

In Southeast Asia’s import market, offers for 5SP billet from traders are at $500-510/mt CFR Manila, moving up by $30/mt compared to last week. There have been no reports of new deals, though market sources agree that they will be “near $490-500/mt CFR” if someone needs to replenish stocks in the coming weeks. Offers for 3SP billet have been heard at $495-500/mt CFR to Indonesia and Thailand.

Turkey’s import billet market has seen a significant price increase this week, following China’s pre-holiday price hikes. As a result, Chinese billet offers have increased by $20-25/mt over the past week to $525/mt CFR in the latest indications, while Indonesian billet has added $30/mt over the same period to $520/mt CFR. No fresh Malaysian billet offers have been heard, following the deal done earlier at $490/mt CFR. The indicative ex-Asia billet offers are not yet considered workable in Turkey, given the long lead time since these cargoes are mainly offered for November shipments. Sources expect around $505-510/mt CFR may be workable in the short run, but everyone aims to see how China returns after its holiday. In the meantime, as expected, Turkish buyers have preferred to deal for an alternative origin when aiming to secure required tonnages. As a result, a medium-sized lot has been booked from Ukraine at $520/mt CFR this week, while another Ukrainian supplier has been offering at $540/mt CFR for December shipment.

Russian billet exporters have also been preparing for a price increase, though for now there has been a lack of firm offers. One offer has been heard from a Russian mill at $490/mt FOB, translating to $510/mt CFR Turkey and above, being too high. A few bids for ex-Russia and ex-Donbass material have been heard at $485-490/mt CFR Turkish Black Sea, translating to $465-470/mt on FOB basis at the highest. Some sellers are waiting and considering resuming offers at $500/mt CFR next week. The SteelOrbis reference price for ex-Russia billet stands at $470-475/mt FOB, up by $10/mt on average since late last week.

Iran has floated two more export tenders for semi-finished steel this week, this time one for square billet and one for steel slab, both from Khouzestan Steel Company and each for 20,000-50,000 mt and for November shipment. The latest billet sales from Iran were concluded at $453/mt FOB on average, which had been considered overpriced for quite a while. However, the mood improved following China’s sharp pre-holiday price increases. Still, despite the better sentiment, many market sources believe there will be a roll-back in ex-China prices once Chinese mills return to the market. As a result, Iranian billet prices are unlikely to increase in the next anticipated sales and the acceptance of current Iranian prices is doubtful at least in the Asian region. GCC-based buyers may, on the contrary, find Iranian billet prices workable. Moreover, according to local Iranian sources, the electricity shortage issue has finally started to ease in Iran, which may help Iranian mills to increase their supplies.

Ex-India billet prices have been increased aggressively by large local integrated mills, following the sharp upturn in China and supported also by the tightening of local supplies, while some sellers have begun to target $500/mt FOB given the strength of the local market. Ex-India billet prices have been hiked to the range of $465-490/mt FOB, up by $15-20/mt over the past week. However, a section of market participants said that some large Indian mills are observed to be reducing export offer volumes in view of the sudden tightening of supplies in the local market and the improved margins for local sales, following the surge of prices in the rebar market. An Odisha-based private integrated mill reported a trade for 20,000 mt at $470/mt FOB, but sources said that the initial offer for 30,000 mt was reduced as the producer had limited short-term inventories.