GLOBAL BILLET WRAP: Chinese offers bring uncertainty to global markets
The world’s billet markets became uncertain last week, with sentiment starting to weaken amid higher availability of China-origin material and volatility in the East Asian country’s domestic prices.
Meanwhile, global scrap prices remained largely stable amid uncertainty about import tariffs in the United States and weakening demand for finished steel products.
Domestic billet prices in the country’s Tangshan region reached 3,590 yuan ($568) per tonne ex-works on Friday March 16, a decline of 40 yuan per tonne from the previous week.
Most of the decrease in billet prices came on Monday, following a drop in rebar prices with sellers facing pressure to reduce inventories and rebar futures weakening.
While inventories adjusted, billet prices had a slight recovery in the last days of the week.
Billet inventories in the Tangshan region totaled 940,000 tonnes, down by 10,000 tonnes from a week earlier, according to a local trader.
On the export side, deals for Chinese billet were concluded at $563-568 per tonne cfr Philippines last week. Buyers needed to secure billet orders to produce rebar, and they could not source any low-priced supply.
Because of offers from China at lower prices, import prices of billet in Southeast Asia edged downward late last week, after a slight increase on Monday.
Besides bookings of Chinese cargoes in the Philippines, a major South Korean supplier sold billet to the country at around $550 per tonne fob.
China-origin cargoes were also heard offered to Indonesia at $550-560 per tonne cfr, down by $10 from the previous week. But re-rollers there were still holding back from booking orders, waiting for prices to fall below $550 per tonne cfr, an Indonesia-based trader said.
The continued weakness in the Indonesian domestic rebar market also affected billet demand.
Metal Bulletin’s weekly price for Southeast Asia import billet was $565-575 per tonne cfr on March 12, narrowing upward from the previous week’s level of $560-575 per tonne cfr.
The reduction in billet prices in China also made clients more cautious. “Buyers would expect possible non-delivery by some Chinese mills if bookings were made at such low prices,” a Vietnam-based trader said.
Offers were heard from the CIS at $550 per tonne fob Black Sea, which is equivalent to around $595 per tonne cfr Southeast Asia. But that price was too high for buyers to accept, sources said.
After an increase in CIS billet prices early on Monday, activity in the region’s billet market was muted during the week, with customers waiting for more clarity in the Chinese market before making further purchases.
Metal Bulletin’s CIS export index was $551 per tonne fob Black Sea on March 12, up by $17 from the previous week.
But no new bookings for material were made during the week with downward sentiment starting to spread in the market.
“I think it is not easy to make new deals this week,” a source said.
In the previous week, prices in the region had increased due to low availability and stronger demand.
Clients and producers had also been waiting for the outcome of negotiations on the decision in the US to impose tariffs of 25% on steel imports from all origins, except for Canada, Mexico and Australia.
In Turkey, the latest offers of CIS-origin billet were heard at $570 per tonne cfr, equivalent to $550 per tonne fob. Ukraine’s Metinvest offered at $575 per tonne cfr Turkey, or $555-560 per tonne fob.
Customers, in turn, were willing to pay only $550-560 per tonne cfr for the material.
In the meantime, export billet prices out of Turkey also increased last week, sources said.
Metal Bulletin’s weekly price assessment for Turkey billet exports was $590-595 per tonne fob, up from the $580-590 per tonne the week before.
In Egypt, on the other hand, the market improved with domestic rebar prices also increasing last week.
Egyptian long steel producer Beshay Steel made its third rebar price increase in March last week, to E£12,900 ($731) per tonne ex-works, from E£12,768 per tonne ex-works previously, including 14% VAT.
An unconfirmed amount of CIS-origin billet was booked at $565 per tonne cfr, while Iran was offering similar product at $550-560 per tonne cfr.
In Iran, the country’s largest billet exporter, Khouzestan Steel, opened a tender for May-production material from March 11 until March 16. Market participants estimated the price at $530-535 per tonne fob, but the company expected to achieve as much as $550-560 per tonne fob.
While mills were pushing for higher prices in new tenders, some market participants were quite bearish, noting recent price fluctuations in the Chinese market.
Esfahan Steel was also offering billet for June-shipment at $530 per tonne fob, including 30% pre-payment.
In India, domestic secondary billet prices narrowed downward to 33,000-33,400 rupees ($508-514) per tonne ex-mill on Friday, from 33,000-33,600 rupees per tonne ex-mill a week earlier.
Billet exports from India have been subdued because of rising domestic demand for finished long steel products and the reduced quantities of material being allocated for export.
Jessica Zong in Shanghai, Fiona Lam in Singapore, Serife Durmus in Bursa, Cem Turken in Mugla, Vlada Novokreshchenova in Dnepr and Suresh Nair in Mumbai contributed to this report.