GLOBAL BILLET WRAP: China’s downturn adds pressure to the market

Prices for steel billet across international markets mostly moved down last week amid growing pressure from China and weaker ferrous scrap prices.

More and more Chinese traders emerged in the market with short-selling offers amid a collapse in their own local billet prices, while in Turkey deep-sea ferrous scrap import prices crashed in the middle of last week.

The short-term outlook for the billet market was mixed, however, as the Chinese steel market was showing signs of improvement by the end of the week.

This prompted some market participants to speculate on whether prices could turn around now, even though many were of the view that there was no clarity on price direction.

“Nobody can say with certainty that we have already hit the bottom,” one trader in Asia said on Friday.

Tangshan billet prices went as low as 2,680 yuan ($389) per tonne including VAT last Tuesday, the lowest since the end of November last year and a drop of 460 yuan ($67) per tonne from a high of 3,140 yuan ($456) per tonne on April 5.

Prices fluctuated throughout the week, but moved up by 30 yuan ($4.36) per tonne late on Thursday and then by another 60 yuan ($8.71) per tonne on Friday, to end the week at 2,780 yuan ($404) per tonne.

Southeast Asia
In Southeast Asia, import prices for billet fell below $400 per tonne cfr.

The last time prices were lower than $400 per tonne cfr was in early February – but at that time, the most competitive offers were coming from Turkey and the CIS countries.

There was news of at least one booking of Q235- and Q275-grade, 150mm billet in Indonesia, at prices just below $400 per tonne cfr.

In the Philippines, short-selling offers from Chinese traders were heard as low as $385-390 per tonne cfr, with one 10,000-tonne cargo of Q235, 120mm billet exchanging hands at around $395 per tonne cfr Batangas.

Such a price would be equivalent to about $390 per tonne cfr Manila.

Because of the rebound in prices in China on Friday, however, market participants were unsure whether the deal would go ahead.

“I wonder if the supplier has reconfirmed this deal,” one trader said on Friday.

CIS, Middle East-North Africa
Earlier in the week, CIS billet exporters were grappling with limited trading activity because of the Easter holidays in the CIS region and Europe, a constitutional referendum in Turkey, and an unfavourable situation in the long steel products segment.

Metal Bulletin’s price assessment for CIS billet exports narrowed to $385-390 per tonne fob Black Sea in the week ending on April 17, from $375-395 per tonne fob a week earlier.

Some billet cargoes from the CIS region, however, were heard selling at $400 per tonne cfr in Turkey, sources said.

Deals were also heard closed at prices ranging between $395 and $405 per tonne cfr in Egypt.

The UAE market, meanwhile, saw limited trading because of a lack of liquidity.

The problem in the market is a lack of cash. And that will not be [resolved] before oil prices increase, which will not happen any time soon,” one trader said.

Billet offers from both China and Iran were heard at $395-400 per tonne cfr UAE, with no major deals heard.