GLOBAL BILLET WRAP: Downtrend persists amid weak long steel, scrap prices

The downtrend in the global billet market continued in the week ended Friday July 13 amid weakness in finished long steel prices, decreasing import scrap prices in Turkey, and generally unfavorable conditions in the global steel market.

CIS, North Africa, Turkey
CIS billet exporters continued to face a lack of demand in some major outlets – notably, Northern Africa and Turkey.

Customers in Egypt and Tunisia cited weak domestic markets for finished long steel products and expected billet import prices to drop further.

Bids from Egypt were heard within the range of $520-525 per tonne cfr, equivalent to $500-505 per tonne fob Black Sea.

Meanwhile, a customer in Tunisia said that the range of $500-505 per tonne fob was too high for him, considering the fall in domestic finished long steel prices.

In Turkey, customers continued to hold back from import billet bookings and preferred to purchase scrap, the prices for which were sharply deceasing last week.

Another reason for the cautiousness of Turkish customers was the loss in the value of the national currency. On July 13, the lira was trading at TRY100 to $20.58, compared with TRY100 to $21.58 on July 6.

CIS suppliers were heard offering billet into Turkey at around $520-530 per tonne cfr, equivalent to $505-515 per tonne fob Black Sea, but customers were willing to pay only $515 per tonne or less, sources said.

In these conditions, buying activity in the CIS export billet market was sluggish, with offers varying mainly within the range of $505-515 per tonne fob Black Sea, depending on the mill.

Several cargoes of Ukraine-origin billet were heard booked within the range of $505-510 per tonne fob Black Sea at the beginning of last week. Various sources, however, noted that the CIS billet market will probably go below $500 per tonne fob Black Sea this week.

Southeast Asia
A cargo of CIS-origin billet shipped from ports in Russia’s Far East province was heard booked via a trader within the range of $540-545 per tonne cfr to Thailand at the end of last week.

Other billet offers from the Middle East were heard at $545 per tonne cfr Thailand, although traders in Asia said it was possible the material might actually be from Iran.

And market participants said that no customers in Southeast Asia or traders selling into this region were now willing to purchase material from Iran due to the likelihood of renewed US sanctions.

In the Philippines, billet offers were heard around $545 per tonne cfr, for Japanese material as well as for Indian induction-furnace billet. Vietnamese induction-furnace billet was offered at $540 per tonne cfr Manila.

But offers and deals prices in the region decreased slightly over the week on sparse trading.

“Re-rollers are facing very thin margins and low rebar prices in the domestic market, so they cannot pay high prices for billet,” a Philippines-based trader said.

No export offers of Chinese billet were reported in the market last week.

Market participants thought an offer of Q235 150mm billet should be around $520 per tonne fob to foreign customers, based on domestic prices.

Meanwhile, local billet prices were 3,720 yuan ($556) per tonne ex-works on Friday, up by 100 yuan per tonne from last Friday.

Billet prices rose over the week due to participants’ concerns about production restrictions in Tangshan province.

The inventory volume for the product in Tangshan was flat at 240,000 tonnes on Friday, a billet trader in Tangshan said, quoting a local industry information provider.

Iran, Middle East
Another billet market which had shown a price increase over the past week was Iran. This was despite generally low buying activity in foreign outlets.

The price increase arose from reduced availability of material.

One of the reasons for a reduced allocation of billet for exports was increased demand for the semi-finished product in the domestic market. This was not spurred by real consumption, however, but by a loss in the value of the national currency.

“The [Iranian] rial is losing value very quickly due to the [likelihood of renewed] US sanctions, so people involved in trade prefer to buy commodities rather than to keep money in their hands,” a source familiar with the situation told Metal Bulletin.

Another reason for the reduced availability of semi-finished steel was that some mills in Iran faced challenges in obtaining supplies of raw materials, again stemming from currency issues. Some mills could not purchase sufficient quantities of direct-reduced iron (DRI) due to their lack of liquidity, sources said.

And semi-finished steel production was also being influenced by a shortage of water in the country during the dry summer period.

In such conditions of reduced availability, offer prices for Iran-origin billet increased week on week to $505-510 per tonne fob, against $500-505 per tonne fob a week earlier.

Customers in the Gulf Co-operation Council (GCC) nations reported offers within the range of $520-535 per tonne cfr.

In the United Arab Emirates, Iranian billet offers were heard at $530-535 per tonne cfr, but no bookings were reported made over the week.

In Southeast Asia, Iranian billet was available at $540 per tonne cfr, sources told Metal Bulletin.

Recent bookings of such material were reported within the range of $500-505 per tonne fob in late June.

Jessica Zong in Shanghai, Fiona Lam in Singapore, Serife Durmus in Bursa, Cem Turken in Mugla, and Felipe Peroni in São Paolo contributed to this report.