Global View on Billet: Market stops falling amid warmer sentiment in China

The downtrend seen last week has reversed in the global billet market this week owing to increases in local and export prices in China. Demand has improved in China and futures prices there have been rising rapidly, giving hope that, overall, September will be better. Other billet suppliers have either also attempted price increases or have been keeping them stable as their prices were previously far above the Chinese prices.

The Chinese reference price for 3SP billet has increased by $20-25/mt over the past week to $440-450/mt FOB, offsetting the drop seen a week ago. The local Chinese market is preparing for a short holiday next week and the previous sharp fall in futures prices ended with rebar futures prices increasing by almost $20/mt over the past week. Activity in the billet export market has been slow and Chinese mills have focused on local sales. At the same time, for some markets, traders are still active in offering competitive prices for Chinese billet and some sales on CFR basis were discussed.

Ex-Indonesia billet prices have settled at $440-445/mt FOB this week, in line with last week. One deal done this week to a trader was at $440/mt FOB with the targeted sales destination said to be “definitely not Asia, only distant markets”, according to a trader. Most market sources believe that this is a bottom for Indonesian billet prices as October shipment order books are closed and the mill will have maintenance works at casters 1 and 2 in the second half of November, and so it is now offering mainly for December shipment. Also, the seller has already sold some November shipment slabs, so in general semis allocation from Indonesia will be limited for November.

Offer prices for imported billet in Southeast Asia have increased this week, following the rebound in China, though buyers have been opposing the trend, especially after signing a few deals at low price levels last week. Last week, a deal for 5SP 150 mm billet was rumored to have been done to the Philippines at $450/mt CFR. But offers for Asian origin 5SP billet have returned to $465-470/mt CFR now. In Thailand, late last week or early this week a deal for 3SP billet of Chinese origin was done at $440/mt CFR. However, new offers to Thai buyers are already close to $460/mt CFR. Some sources said that prices have increased too much for customers and that bids are the same and are unlikely to rebound at least in the near term.

Last week deals for Chinese 3SP were signed to Taiwan at $430-435/mt CFR, but offers increased to $440/mt CFR on Tuesday and rose further to $450-460/mt CFR on Thursday, following the trend of stronger futures prices in China.

In Turkey, integrated producer Kardemir this week announced billet prices at $530/mt ex-works for S235JR grade and at $545/mt ex-works for B420, down $5/mt compared to late August prices. Taking into account the $20/mt discount for 5,000 mt orders and one percent discount for orders over 500 mt for cash payment, Kardemir’s price worked out at $505/mt ex-works. Given its good relations with regular buyers and the necessity for some smaller companies to restock with limited lots, Kardemir managed to sell around 45,000 mt and then closed its sales. Overall, domestic billet prices in Turkey are estimated at $530-550/mt ex-works, with the higher end of the range relevant for the Iskenderun region.

In the import segment, market players in Turkey have been actively discussing two 50,000 mt billet lots, traded to two Turkish mills at $465/mt CFR or slightly below, while subsequent offers have been set at $475-480/mt CFR for November deliveries. No further transactions have been reported at the end of the week and buyers expect to see a clearer market picture once China returns in the middle of next week after its holiday.

The SteelOrbis reference price for ex-Russia billet has remained stable at $460/mt FOB Black Sea, but the mood among buyers has been better this week. There were bids at $480-485/mt CFR TBS [Turkish Black Sea] for October shipment, translating to $460/mt FOB Black Sea. Last week, offers from both Russia and Donbass, the Ukrainian territory currently occupied by Russia, were at $485/mt CFR and $480/mt CFR respectively, but there was no response from buyers.

Iranian billet exporters continue to maintain a sporadic presence in the international market since many of them still have limited allocations due to electricity supply issues. Moreover, while billet prices globally, particularly in Asia, have been rather weak and fluctuating, most international buyers would be reluctant to pay the price levels sought by Iranian mills. Iranian producers, in turn, will not want to sell at low levels since their outputs are still limited and their costs are high. According to sources, Iran’s Chadormalu Mining and Industrial Company has traded 30,000 mt of billet this week at $453/mt FOB, which is line with the previous evaluated levels. However, some bids have been reported down to $435/mt FOB. The price level in the concluded transaction is considered high by many and would definitely not be workable in Asian markets, while it could find some acceptance among GCC and East African customers, SteelOrbis estimates. Iranian market sources expect the electricity supply issue in their country to slowly return to normal, some time by the end of September, giving the mills a breather before being impacted by the traditional natural gas supply issues in the winter period.

Ex-India billet prices have added $10/mt on average over the past week to $448-452/mt FOB, following some improvement in bids and sellers have still been interested in exports as the local market remains not so promising. A government mill which held an export tender for 30,000 mt of 150 mm billet in the past week, received the highest bid at $449/mt FOB from a trading firm, an improvement over the $441/mt FOB bid received earlier in the month. The mill was emboldened by the improved bid to float two back-to-back export tenders aggregating 50,000 mt, to be closed later this week.