GLOBAL BILLET WRAP: Many markets in holiday lull, prices seeking direction

Buying activity in the global steel billet market was muted last week as most of the potential customers were on religious holidays.

“The Middle East, Africa, and half of Asia are on [the Islamic] Eid al-Adha holiday,” a trading source told Metal Bulletin, noting that prices were largely static during the week, waiting for a return to market activity and evidence of a clear direction.

“It is hard to say where we are heading now, as there are just offers and no deals,” a customer in the Middle East said.

Besides that, the market was waiting for market direction to be shown by a resumption of scrap bookings in Turkey, which has been quiet for the past week and was not particularly active in the previous seven days.

CIS, Middle East-North Africa
Recent offers of CIS-origin billet were mainly within the range of $510-520 per tonne fob Black Sea. However, no bookings were heard done at these prices last week.

There was unconfirmed information circulating in the market about a sale to a trader of Russia-origin billet at around $486 per tonne fob Rostov.

Deliveries from Rostov incur additional transportation costs for travel along the River Don, compared with those from Novorossiysk, which has direct access to the Black Sea.

Because of this additional expense, there was little sense in selling to any destination that was not close, a market source told Metal Bulletin, suggesting that the cargo would probably not go further than the Black Sea basin.

“I think the sales market can be only Turkey,” he added, noting that the cost of freight from Rostov to the north of that country would be around $30 per tonne.

Recent bids from Turkish customers heard last week did not exceed $510 per tonne cfr, while trading sources said that the maximum achievable price would be $515 per tonne cfr.

However, no bookings were confirmed in Turkey this week.

In Egypt, which has recently been one of the largest outlets for CIS-origin billet, last week was also quiet. Recent bookings were reported done around two weeks ago at $510-515 per tonne cfr.

The cost of freight from Black Sea ports to the destination is around $20 per tonne.

Last week, some offers were heard within the range of $525-535 per tonne cfr, against $520-525 per tonne cfr a week earlier, but there were no takers.

“So far, this price is too risky to conclude [deals],” a source told Metal Bulletin, adding that market participants would prefer to have some indication of market direction and, depending on that, estimate a workable billet price.

The other Middle East markets have also been quiet on both the buyers’ and sellers’ sides.

An Iranian producer said on Thursday August 31 that it will announce a new tender only next week, when the market situation becomes clearer.

Southeast Asia
The market in Southeast Asia has also been largely quiet over the past week.

There were some billet bookings done in The Philippines within the range of $535-538 per tonne cfr, against $530 per tonne cfr a week earlier. These involved material of Middle East, Vietnam and Japan origins, sources told Metal Bulletin.

The other markets in Southeast Asia were largely inactive due to holidays and uncertainty over Chinese domestic prices.

After booking several cargoes at higher prices in late August, most customers in Indonesia went on holiday.

There were some bids in the country heard within the range of $510-535 per tonne cfr, but no bookings were done.

“Many position cargoes have been released recently at $540 per tonne cfr,” a source trading to the destination told Metal Bulletin, noting that customers were not ready to pay more than $535 per tonne cfr.

Russia-origin billet shipped from ports in the country’s Far East province was also reported to be available in the region at $540 per tonne cfr early this week.

Recent offers of Vietnamese and Chinese billet were heard within the range of $555-560 per tonne cfr.

No bookings from China were heard done this week in Southeast Asia, but exporters expected $520-530 per tonne fob to be workable. The estimated cost of freight to Southeast Asia is $15-20 per tonne.

Meanwhile, domestic billet prices were 3,760 yuan ($570) per tonne at 3pm on Friday, 20 yuan per tonne lower than last Friday.

The price rebounded by 60 yuan on Thursday and Friday, having fallen to 3,700 yuan per tonne on Monday.

Inventory levels of the material in Tangshan remained stable at around 200,000 tonnes.

Expectations in the market of future price movements were divided.

Some participants forecast a price rise because of the consequences of a fire at one of the country’s long steel rolling mills, Benxi Iron & Steel, and air-pollution inspections in north China.

But other sources were bearish because the inventory of rebar was increasing, while demand for the material remains weak because work at some construction sites has been suspended.

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.

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