GLOBAL BILLET WRAP: Iran livens up in positive market, while China and CIS step back
Both China and the CIS region have been less active in the steel billet markets over the past week, but Iran has shown more activity in the semi-finished product trade, amid a generally positive mood.
Offers for billet from the Middle Eastern country were heard by Metal Bulletin reporters in Turkey, the UAE, Egypt, Indonesia and Thailand.
The mood in the billet market was expected to remain positive due to a rise in Turkish imported scrap prices, firmer demand in the Chinese domestic billet market, and the reduced availability of material from the CIS region.
Metal Bulletin’s daily ferrous scrap index for USA-origin HMS 1&2 (80:20) rose by $4.36 over the week to $277.64 per tonne cfr Turkey on active bookings.
Iran, Middle East
Iranian billet exporters are gaining a foothold in the global market, offering material at rather attractive prices compared with those from the CIS and China.
One Chinese trader had heard offers from Iran as low as $380-385 per tonne fob southern ports, which would be equivalent to $400-405 per tonne cfr Thailand or $410 per tonne cfr Indonesia.
A trader in Bangkok said that there were indications of Iranian cargoes being available at prices as low as $395 per tonne cfr, but there was no information about bookings.
In Turkey, recent offers from Iran were heard at $410 per tonne cfr, and in Egypt at $415 per tonne cfr.
In the UAE, Iranian material was heard on offer at $400-410 per tonne cfr this week. Unconfirmed offers at $385-390 per tonne cfr were also heard.
No major deals were reported, however, because of the slowdown of activity in the country as the Islamic nations prepare for their holy month of Ramadan.
Turkish billet buyers have shown reduced activity over the past week due to the approach of Ramadan, as well as higher interest in scrap bookings.
“CIS suppliers are offering billet at $410-420 per tonne cfr, but there [have been] no takers from Turkey,” a Turkish source said.
As no deals have been reported at this destination, sources said that the workable price would be around $405 per tonne cfr.
The estimated cost of freight from the CIS to Turkey would be around $15 per tonne.
Black Sea billet exporters have themselves been rather calm this week, amid reduced availability of material on one hand and slack buying on the other.
“The market has been unusually quiet this week,” one trader said.
In general, offers from CIS mills were heard around $400-405 per tonne fob Black Sea.
Ukraine’s Elektrostal was heard selling one billet cargo at $390 per tonne fob Azov Sea this week, reportedly to Europe, which would be equivalent to $395 per tonne fob Black Sea.
Recent offers from the mill were reported at $395 per tonne fob Azov Sea, up by $5 per tonne over the week.
Compatriot mill ArcelorMittal Kryvyi Rih offered material at $405 per tonne fob Black Sea, according to sources.
Allocations of billet from Ukraine remain reduced as the ISD-owned Dneprovskiy Dzerzhinsky Metallurgical Plant (DMKD) continues to be idled.
Meanwhile, production has recently restarted at the Metinvest-owned Yenakiieve Iron & Steel Works, which is currently under the control of pro-Russia rebels.
The billet being produced is said to be intended for re-rolling at Yenakiieve and its sister Makiivka unit.
Offers of billet from Russia’s Novorosmetal were heard around $400 per tonne fob Black Sea, one source said.
However, other sources said that most of the Russian mills have sold out for June and are not offering July material yet.
Market participants in the Philippines have been waiting to see whether a visit to Moscow this week by their country’s president, Rodrigo Duterte, would result in the elimination of an import duty on Russian billet.
Currently, there is a 3% import duty imposed by the Philippines on billet from most of the world’s countries, including Russia, Ukraine and Turkey. Material from the Assn of Southeast Asian Nations (Asean) region and from countries with which Asean has free trade agreements – such as China – face no duty.
“If the duty on Russian billet is eliminated or reduced, Russian billet would become very competitive here,” a second trader said.
Meanwhile, at least two bookings were heard done in the country late last week around $425 per tonne cfr.
Both deals would comprise 10,000 tonnes of EAF-produced billet, one of them from Thailand and the other from Vietnam, sources in Manila, Bangkok and Ho Chi Minh City said.
On Friday, there were rumours about one deal closed just below $440 per tonne cfr Manila for a Vietnamese billet cargo.
Several sources in the Philippines and other countries, however, did not believe such a high price could be achieved, especially since there were more competitive offers in the market.
In Vietnam this week, 20,000 tonnes of Thailand-origin billet, in 150mm size and grade equivalent to 5sp, was heard sold at $415 per tonne cfr.
In Indonesia, a 5,000-tonne cargo from a Thai electric arc furnace (EAF) mill, was heard sold late last week at around $405 per tonne fob, which would be equivalent to around $420 per tonne cfr.
And a bigger cargo from a second Thai EAF producer, of as much as 15,000 tonnes, was heard sold just below $420 per tonne cfr.
There have also been widespread rumours that a number of Indonesian buyers are worried about the fulfilment of bookings they have closed in recent weeks at $395-405 per tonne cfr, for Chinese material.
“Traders were short-selling at those [prices] and they might not be able to deliver, now [that prices from China have moved up in recent weeks],” one buyer source in Indonesia said.
If shipments are delayed or cancelled, a few of these buyers might need to accept higher prices for prompt-shipment cargoes of non-Chinese material, other sources added.
Meanwhile, Chinese suppliers have largely held back from the international market this week, with recent offers heard around $420-425 per tonne fob.
Domestic billet prices in China rose by 40 yuan ($5.82) per tonne over the weekend of May 20-21, and by another 20 yuan ($2.91) per tonne on Monday, to reach 3,140 yuan ($457) per tonne.
By the middle of the week, the price decrease in the paper market led to thinner trading in the spot rebar market, which put pressure on prices and demand for billet.
On Wednesday, Chinese billet hit 3,060 yuan ($445) per tonne including VAT in Tangshan.
However, with the market set to take a break from the coming weekend until Tuesday, for the Dragon Boat Festival, traders decided to spur buying activity in rebar by lowering their prices.
Buyers, on seeing the lower prices, stepped up their procurement in order to swell their inventories.
As a result, billet prices increased somewhat, ending the week at 3,100 yuan ($451) per tonne on late on Friday.
Nadia Popova in Moscow, Juan Weik in Singapore, Jessica Zong in Shanghai, Suresh Nair in Mumbai, Serife Durmus in Bursa, Cem Turken in Mugla and Felipe Peroni in São Paulo contributed to this report.