Global View on Billet: China’s rapid rebound pushes up prices globally, outlook for October better

Sentiments in the global billet market have changed drastically this week after the sharp price rises seen in China, following the announcement of a number of stimulus measures to support the economy and the struggling real estate market. Moreover, the outlook has also become more positive for October.

The SteelOrbis ex-China billet reference price has risen for four days in a row this week, finishing the week at $460-475/mt FOB, up by $12.5/mt from yesterday, September 26, and up $27.5/mt over the past week. The government stimuli for the property market announced on Tuesday this week significantly boosted sentiments in the steel market, while the implementation of the RRR cut together with the adjustment of the seven-day reverse repurchase operation rate as of today, September 27, just before the week-long holiday, have also made expectations positive for the post-holiday period. In this situation, exports of billet have been at a standstill this week and the trend may continue in the coming three weeks.

An Indonesian mill has started sales for January shipment billets with a deal confirmed by the mill and a number of traders at $450/mt FOB in the middle of this week, while the previous contracts for December shipment were at $442-445/mt FOB. Some market sources said the mill’s deal was for 50,000 mt in a long position, but the mill has denied confirming the volume and some traders believe that the real volume was smaller. The previous deals done at $442-445/mt FOB were partly for further sale to Turkey, while also for Indonesia and the Philippines. A deal for billet from one of the Malaysian producers has been reported at around $450-455/mt FOB for 50,000 mt, with the expected final sales destination being Turkey.

In these market conditions, offers for 5SP billet from traders to the Philippines have increased to a minimum of $470-475/mt CFR, up by $10/mt over the past week, while as of Friday buyers have been receiving offers mainly at $475-480/mt CFR. A deal for ex-China 3SP was reported at $450/mt CFR to Thailand last week. But this week offers from traders to both Indonesia and Thailand have increased to $465-475/mt CFR.

Following the sharp rises seen in the Chinese billet market, Russian billet prices have again become the most competitive in Taiwan’s import market. On Monday, the main Russian mill shipping from the Far East ports of Russia reduced its billet offers to Taiwan by $5/mt to $450/mt CFR for December shipment and, though most buyers were still targeting $440-445/mt CFR, it seems that Russian billet is now the most competitive. Last week, traders were ready to sell ex-China and ex-Indonesia billets for December shipment at $450-452/mt CFR Taiwan, while Russian offers were at $455/mt CFR. But by the end of the week ex-China offers have jumped to $480/mt CFR at the lowest, while Indonesian billet is available at $470-475/mt CFR. Market sources are waiting for deals to be done for Russian material at $455-460/mt CFR Taiwan.

In Turkey, local integrated producer Kardemir opened new billet sales this week at $530/mt and $555/mt ex-works depending on the steel grade, and managed to sell at least 30,000 mt of billet, though many sources report the tonnage is larger. Due to the discounts provided for payment terms and volumes, Kardemir’s actual billet price is estimated at $514.7/mt ex-works, while previously it was around $505/mt ex-works with slightly different conditions. Other suppliers in Turkey are offering at $550/mt ex-works minimum for billet, while levels of $560-565/mt ex-works have also started to be heard in the market.

In the import segment, Turkey has seen quite an increase in prices, mainly triggered by the more positive situation in China. However, demand has not improved much and most of the large Turkish buyers will most probably wait until after the long holiday in China in order to restock. A deal for 50,000 mt of ex-Malaysia billet was closed at $490/mt CFR at the end of last week and by the end of the current week ex-Asia prices have increased. The latest ex-China billet offers have settled at $500-505/mt CFR, versus $485-495/mt CFR earlier. Indications from Indonesia have been reported at $490/mt CFR minimum, while earlier this week $470/mt CFR was considered a reachable level.

Offers for ex-Russia Black Sea billet have also been on the rise. One of the main mills in Russia was asking for $465-470/mt FOB Black Sea, after a deal at around $470-475/mt CFR to Turkey last week. The new FOB level translates to $485-490/mt CFR Turkey for sizable lots. But Turkish buyers have been cautious as regards imports at higher prices. There have been reports of small-volume deals for billet from the Donbass region, the Ukrainian territory occupied by Russian troops, at $475/mt CFR Turkey. The price translates to $450-455/mt FOB, but could be achieved only for ex-Donbass material, according to sources. Earlier in the week, offers from Donbass were heard at $480-485/mt CFR Turkey.

Iranian billet exporters have managed to largely maintain their price positions even though the global market has been fluctuating. Higher billet prices from China may in theory provide Iran with a chance to sell to Asia. However, other regional origins are still more competitive. “If China remains at the same high level and Iran goes $10-15/mt lower than now, then there is a chance,” a source told SteelOrbis. The latest deals for a total of 50,000 mt of billet from Iran have been reported at $453/mt FOB on average, almost in line with the previous deals by another Iranian steel producer reported earlier. Iranian IF-based billet producers have been offering mainly at $430-440/mt FOB.

Ex-India billet prices are assessed at $450-470/mt FOB, versus $450/mt FOB last week, but Indian sellers have been holding back from submitting offers after a surge in domestic sales volumes and prices, which would in turn impact export allocations going forward. In the local market, the sustained pessimism and the downtrend in the market for semis underwent a sharp reversal, catching both sellers and producers by surprise. Reflecting the surge in prices of rebar, billet trade prices gained INR 1,800/mt ($22/mt) to INR 41,600/mt ($496/mt) ex-Mumbai and surged by INR 2,100/mt ($25/mt) to INR 39,500/mt ($473/mt) ex-Raipur in the central region.