Global View on Billet: Gradual recovery in prices leads to better non-China sales

This week, prices for billets in the global market have again improved with the confidence in the trend improving. Better sentiments in China have led to higher prices and lower export sales, while other major suppliers like those from ASEAN, Iran and India have managed to sell sizable lots or get better bids than in the past month.

Ex-ASEAN billet suppliers have increased billet export sales recently after weeks of slow trading as competition with Chinese sellers have eased. As a result, the Indonesian mill has managed to sell as much as 150,000 mt of billet since Friday. Sales were at $440-445/mt FOB first and $445-450/mt FOB later, while most offers from the mill were $440-445/mt FOB last week. However, early this week some sources have already seen offers at $450/mt FOB and market sources have said that the seller will definitely target $455-460/mt FOB for November shipments. Most volumes sold have been heard for traders, covering short positions, according to sources. Over the past few weeks Chinese billet offers were below that from Indonesia by $10/mt or more, so buyers focused on ex-China purchases, leaving ASEAN mills with poor order books.

Since Monday this week, ex-China reference price has been at $440-455/mt FOB with the midpoint at $447.5/mt FOB. Offers are rare and at the higher end of the range and up to $460/mt FOB on Thursday, though market sources said that the level is unworkable. “It is hard to find good offers from China now. They [prices] should be at $440/mt FOB, but in reality, mills are out of the market,” a Chinese source said. Moods in the Chinese market have improved more this week mainly on expectations of demand improvement in September and as a reaction to Chinese government halting steel capacity replacement program as of August 23. Moreover, most mills have already been seeing losses for some time, so a price rebound has been expected.

The activity in the Southeast Asian import billet market has been close to zero this week as after rise in offers last week, prices have inched up further. As a result, the gap between offers and bids has increased to $15-20/mt. In the Philippines, offers for 5SP billet have been reported at $470-475/mt CFR, up by $5/mt over the week. But the latest deal was heard to be done only early last week at around $460-465/mt CFR. In Thailand, the latest offers for 3SP billet have been at as high as $460-470/mt CFR, moving up by $5-10/mt from last week, while bids have been hardly above $440/mt CFR. In Indonesia, the latest deal was done a week ago at near $450/mt CFR, though there has been no confirmation for this by the time of publication. Now, all offers are starting from $460/mt CFR.

In Turkey, the key billet import offers have inched up over the week while the buyers have been quiet, preferring to watch the situation and not to restock in large volumes further. Moreover, some of the sources have reported that two of the Turkish mills have either cancelled or trying to cancel several billet lots booked from China at above $500/mt CFR earlier, but the information has not been confirmed from the alleged parties by the time of publication. The most recent offers from China have settled at $485-490/mt CFR, $5/mt higher from the past week. Similar to China, ex-Malaysia and ex-Indonesia offers are also indicative at $505/mt CFR (up from $490-500/mt CFR last week) and $490/mt CFR ($5/mt up over the week), respectively. In the domestic market of Turkey, the billet prices are at $530-550/mt ex-works, with some attempts of the Iskenderun region-based suppliers to increase their prices $5-10/mt from the upper end of the mentioned range, based on limited availability in the area.

Russian and Donbas-based suppliers, following the sales at $480/mt CFR and $465-470/mt CFR, respectively, have stepped back from the market, aiming to evaluate the trend more closely. While China has rebounded, though there is not much interest, the scrap has remained weak, which makes the mills in Turkey wait with new billet purchases, similar to the small billet importers. Some of the ex-Black Sea billet sellers have been voicing $490/mt CFR as an indication, which might be workable only for small lots and for immediate shipments. The SteelOrbis daily reference price for ex-Russia billet is now at $460-470/mt FOB Black Sea, $10/mt up over the week, though indicatively.

Iranian steel producers have managed to activate their billet export sales while choosing the higher paying destinations, where the trade is somewhat challenging and the competition with China has its limits. Particularly, according to market information, Iranian Esfahan Steel Company has recently traded 30,000 mt billet for October delivery via an export tender. The deal was closed at $465/mt FOB, and the cargoes will most probably be distributed to Africa buyers, particularly Ethiopia and Djibouti. Overall, while taking into an account the situation in Asia and Turkey, Iranian workable billet prices are estimated at maximum $440-450/mt FOB, while some bids have been even heard at $420-440/mt FOB. In the GCC, the latest billet offers from Iran to the UAE and Oman are at $480-490/mt CFR with no takers reported just yet. In addition, two more Iranian mills are having tenders for 25,000-30,000 mt of billet each, both for October delivery.

Ex-India billet prices improved visibly, and more Indian mills intended to offer overseas amid turnaround seen in China and more buyers willing to commit trades, anticipating that the market may well have bottomed out. The reference price for ex-India billet was settled at $450/mt FOB this week with a few bids and deals reported at around this level, compared to $438-445/mt FOB. Sources said that a government mill, which held an export deal for 30,000 mt on August 26, received the highest bid of $452/mt FOB from a Middle East-based buyer, an improvement from $438/mt FOB bid, received for a similar tonnage early in the week.