Global View on Billet: No common trend in Asia and MENA, but overall outlook positive

There has been no definite common trend in the global billet market this week, unlike in previous weeks. Prices from China have rolled back slightly after very positive expectations failed to be realized, at least for now. However, in the MENA region, an uptrend has prevailed supported by higher scrap prices. Overall expectations for next week are positive worldwide.

The Chinese steel market has reacted strongly to the weaker-than-expected spendings announced by the NDRC at its press conference on Tuesday, October 8. The new reference price for ex-China 3SP billet has settled at $470-475/mt FOB by the end of the week, down by $12.5/mt compared to the level announced on September 30, the last day before the long holiday. Though early in the week, mills’ targets were heard at $500-505/mt FOB, offers came down to $475-480/mt FOB later, following the developments in the local market.

Export prices have been adjusted down after rebar at Shanghai Futures Exchange lost 3.29 percent on Wednesday. The NDRC announced RMB 100 billion (US$14.1 billion) to be issued in advance from the 2025 central budget and it will prepare the list of the major construction projects to be developed using these spendings. However, this has been assessed as “insufficient support” compared to the expectations of many major analysts for support amounting to trillions in the local currency.

However, market participants believe that the Chinese steel market may resume its upward trend next week if strong fresh stimuli are announced this Saturday, October 12, at a scheduled finance ministry briefing. Different analysts from the major investing banks are expecting at least RMB 2 trillion ($283 billion) to be issued in special bonds.

Major ASEAN billet exporters voiced target prices at $500/mt FOB early this week. After sales at $481/mt FOB, the Indonesian mill is not going to go below $490-500/mt FOB, according to market sources, having only late January shipment allocation left unsold. A Vietnamese mill has been keeping its offer for November shipment billet at $500/mt FOB too.

Prices for imported billet in Southeast Asia have remained high after the hike before China’s holiday in early October. Most buyers have remained inactive as sentiments in China have been mixed and they have been waiting to see if traders will return with lower short position offers or not. Offers for 3SP and 5SP to the Philippines have been at $490-500/mt CFR and $495-510/mt CFR respectively. In Indonesia and Thailand, there has also been minimal trading activity and the tradable level has been assessed at $490-495/mt CFR for 3SP billet, taking into account the lowest offers heard.

In Taiwan, the latest deal was done for ex-Russia billet at $485/mt CFR for late December-January shipment. This is significantly higher than bookings done at $445-450/mt CFR in the middle of September. At the moment, offers from China have been less competitive, at $490-495/mt CFR.

In Turkey, integrated producer Kardemir has announced billet sales at $550/mt and $575/mt ex-works depending on the steel grade, while the actual price, taking into account all the payment and volume-related discounts, is estimated at $539.5/mt ex-works. The supplier has managed to sell over 20,000 mt, with its sales still open. In the import billet market, buyers have been aiming to see a settled offer levels since China returned from its holiday. The CFR offers have remained at $520-525/mt from China despite a softening seen on the FOB side, since freight rates have increased. Levels $5-10/mt lower are considered to be achievable, although Turkey’s interest is on the low side now, while Turkish mills prefer buying scrap at present. No firm offers have been heard in Turkey from ASEAN-based suppliers, while the indications from Ukraine for December shipments have been reported at $540/mt CFR. The workable prices from Russia and Donbass, according to sources, are at $500-505/mt CFR, versus $475-483/mt CFR in deals concluded a fortnight back.

Iranian steel producers have floated a couple of new tenders this week and some of the earlier ones are reported to have been closed. In particular, Iran’s Chadormalu Industrial and Minining Company has opened a tender for 30,000 mt of billet for end-of-November delivery, valid until October 15. In addition, BF-based steel producer BISCO has opened a tender for a large volume of billet for shipment in November. According to sources, Khouzestan Steel Company has succeeded in selling semis in earlier tenders at $430/mt FOB for steel slab and $465/mt FOB for billet. Most sources believe the announced price is exaggerated and assume the workable price level for ex-Iran billet is not higher than $455/mt FOB, giving the softening in China and limited demand in key destinations.

Ex-India billet prices have been assessed at $475-500/mt FOB, moving up by $10/mt over the past week, and, though sellers are still optimistic about targeting the $500/mt FOB mark, they are heard to be holding back submitting offers at higher levels as cues from China are uncertain and a definite trend is only expected to emerge once business activity picks up. Furthermore, large Indian integrated mills have seen a sharp drawdown on inventories of semis and so they have lowered their available export allocations after several consecutive weeks of rapid high-volume merchant trade in the local market at higher prices, with the rebar market continuing to surge, the sources said.