GLOBAL BILLET WRAP: Buying activity subsides as price upswing persists
Steel billet prices in the global markets continued to trend upwards last week, supported by sustainable demand for the material and positive developments in the finished long steel sector.
Reduced availability of billets in some markets was another factor that allowed suppliers to push prices further upward.
However, another round of price increases saw buying activity cool down somewhat in the major buying outlets.
“Prices going higher may become the reason for non-acceptance in the market. This will bring demand down, and suppliers may lose business if they maintain prices at the same level,” a source told Metal Bulletin.
Billet prices in the Chinese local market were 3,460 yuan ($512) per tonne on Friday July 21, higher by 60 yuan ($9) per tonne than they were last Friday.
Billet inventory was believed to have fallen to 130,000 tonnes in Tangshan, which was the principal reason for the rise in billet prices.
There was a rumour in the market of Iranian billet being imported into China at a price of 2,800-3,100 yuan ($414-458) per tonne. This was not widely confirmed at the time of publication, and some sources believed that Iranian billet was less competitive than China’s domestic products, considering the 17% VAT in the country.
Meanwhile, no export offers were reported last week from China as “no foreign buyers could afford the price”, market participants said.
The estimated export price of Chinese billet would be $480 per tonne fob.
Billet prices in Southeast Asia continued to rise over the past week, supported by the absence of China from the market and global price growth for the semi-finished product.
Some tonnages of Russian material were reported sold to the region at $465 per tonne cfr last week.
Several cargoes of Vietnamese billet were also heard booked in the Philippines at $460-465 per tonne cfr, against $445-455 per tonne cfr a week earlier.
New offers from Russia, India, Thailand and Vietnam were reported to vary within the range of $470-480 per tonne cfr in the region, sources told Metal Bulletin.
However, customers were not ready to accept higher prices and most of them preferred to take a wait-and-see position.
“There is resistance on the part of buyers as the price of finished products made from these billets is not increasing proportionally. There is no replacement cost to start with,” a source told Metal Bulletin.
Iranian billet was available in Southeast Asia within the range of $445-455 per tonne cfr, sources told Metal Bulletin.
No new bookings have been heard so far in the region.
In the UAE, Iranian billet was offered at $430-435 per tonne cfr – the lowest of all offers available in the country.
However, this price has not spurred any interest, because customers in the country have ample stocks at the moment.
Recent offers of billet from Iranian mills were heard at $410-415 per tonne fob southern ports, up by $5 per tonne week-on week.
CIS-origin export billet prices have also increased over the past week from $430-435 per tonne fob Black Sea heard on July 17, to $435-445 per tonne fob on Friday.
Reduced availability of the material in the region, as well as favourable conditions in the market for finished long steel products, were pushing prices upward.
One cargo was rumoured sold to Turkey directly from the mill at $445 per tonne cfr, sources told Metal Bulletin. The estimated cost of freight to the destination was around $15 per tonne.
This information had not been widely confirmed at the time of publication as bids from Turkish customers heard earlier in the week did not exceed $430 per tonne cfr.
“Turkish customers are not keen to pay $445 per tonne cfr for September-shipment material yet,” one trader said. “But I heard their domestic rebar price is around $500 per tonne ex-works now, so maybe higher billet prices will be accepted soon.”
Another cargo of CIS-origin billet was rumoured to be sold to Algeria within the range of $450-455 per tonne cfr. This deal, however, was also not widely confirmed at the time of publication.
In another North African market – Egypt – recent bookings of CIS billet were heard early last week at $440-445 per tonne cfr from Ukraine.
But by the end of the week, some customers were ready to pay as much as $450-455 per tonne, sources said.
Jessica Zong in Shanghai, Cem Turken in Mugla, Suresh Nair in Mumbai, Serife Durmus in Bursa and Felipe Peroni in São Paulo contributed to this report.