Global View on Billet: Fundamentals weak, expectations prevent strong price falls

This week, billet prices in the global market have been more or less stable though with some negative bias, only posting significant declines in some markets like Turkey. At the same time, in the Asian billet market, all eyes are still on China, with expectations of a positive trend after announcements of a new package of stimulus measures for a period of three years.

The reference price for ex-China billet stands at $465-475/mt FOB, stable on average, but narrowing by $5/mt from $460-480/mt FOB last week. Most offers are at $470-475/mt FOB, while customers have been insisting on prices equivalent to $460-465/mt FOB.

Regarding the anticipated stimulus package, on November 8, Lan Fo’an, China’s finance minister, stated that China will add RMB 6 trillion ($0.84 trillion) to refinance local government debts up to the end of 2026. The minister said that the hidden debt of local governments is expected to be cut dramatically from RMB 14.3 trillion ($2 trillion) in late 2023 to RMB 2.3 trillion ($321 billion) by the end of 2028. Also, the limit for issuance of special bonds for local governments will increase by over 20 percent. However, no further stimuli for the real estate sector have been issued, so, though general expectations for the steel market have been rather positive, market sources are waiting for more changes to be seen in steel demand. For now, the outlook for the Chinese steel billet market is from stable to gradually increasing.

ASEAN mills have either focused on sales of products other than billet or have had to cut prices to push billet sales. It is reported that an international trader has booked 50,000 mt of billet for December shipment from a Vietnamese mill at $468/mt FOB. Turkish market players, for their part, have reported a transaction from Vietnam at $505/mt CFR, though the alleged buyer in Turkey denied this. The Indonesian mill has remained inactive in billet trading after announcing its official billet offer for February shipment at $485/mt FOB. The real tradable level for billets from the ASEAN region has been assessed by a number of traders at $470/mt FOB. At the same time, one deal has been reported by the Indonesian mill for slab. The final price has not been confirmed by the time of publication, but sources are assessing it as not being above $480/mt FOB.

Prices for imported billet in Southeast Asia have been stable and activity has been at minimum levels as buyers are still thinking a decline in possible in the near future. The offers level for 5SP 150 mm billet to the Philippines have been at $490-495/mt CFR Manila, while no deals have been reported in Southeast Asia after a sale of Chinese origin billet at $490/mt CFR to Indonesia (for a mixed 3SP and 5SP cargo). The lowest offers for 3SP billet have been reported to Taiwan from both China and Russia at $480/mt CFR.

The SteelOrbis daily reference price for Russian billet has declined by $5/mt over the past week to $460-465/mt FOB. The Russian sellers have focused on sales to Turkey, with two lots for a total of over 10,000 mt sold from Russia in this price range.

In Turkey, local producer Kardemir has cut its billet price by $15/mt over the past two weeks to $520/mt ex-works for S235JR and $545/mt ex-works for B420 steel grade. The mill managed to sell at least 45,000 mt since the price was found attractive given the payment terms and tonnage-related discounts. In the Iskenderun region, billet prices stood at $560-570/mt ex-works this week, down by at least $10/mt from last week. In the import segment, ex-China billet has been available at $510-515/mt CFR this week, while Malaysian origin has been offered at $525-530/mt CFR. A deal from Vietnam for a large lot has been rumoured at $505-510/mt CFR and, though it was not confirmed by the time of publication, it matches the 50,000 mt sale by a Vietnamese mill to an international trader at $468/mt FOB for December readiness.

While Asian billet currently attracts weak interest in Turkey due to long lead times, some small and medium-sized buyers have been sourcing material from the Black Sea region. While Ukraine is out of the market for now due to limited billet availability, Russia has been more active. While last week small deals from Russia were closed at $490-495/mt CFR, early this week some transactions to the Karabuk region were done at $486-487/mt CFR. By the end of the week, there has been talk about a 8,000 mt cargo sold by a Russian mill to the Izmir region at around $480-485/mt CFR.

Iranian mills have been moderately active in billet exports in the past week amid expected production cuts linked to imminent restrictions on natural gas supply to local heavy industries. In addition, domestic billet prices have increased to IRR 25,500-26,500/mt kg, up by IRR 1,300-1,800/mt over the past fortnight. As a result, only one mill is currently holding an export tender, for 15,000 mt of 150 mm billet, with the workable price estimated at $450-455/mt FOB, while the first-tier mills are likely to achieve $460-465/mt FOB. Some small ready EAF billet cargoes are available at $425-450/mt FCA, while IF billet is on offer at $420/mt ex-works. In the GGC, Iranian billet is still offered by traders at around $485-490/mt CFR, while in Turkey small lots have been available this week at $480/mt DAP Karabuk.

Ex-India billet prices have been kept unchanged by large mills, but local mills have stayed away from exports in the face of challenging competition, particularly with China. While government mills, usually the more active among exporters of semis, have been absent from the market, private mills were heard quoting at unchanged levels of $480-490/mt FOB, but were unable to conclude deals as buyers in Asia were asking for $460-465/mt FOB. As a result, the ex-India reference price has remained at $460-480/mt FOB, including the latest offers and bids.