GLOBAL BILLET WRAP: Market positive on uptrend in China, expectation of revival in demand

Sentiment in the global steel billet market was positive last week, despite it being largely quiet in terms of buying activity due to holidays in most customer markets.

One of the reasons for the optimism was the continuing price growth in the domestic market in China.

“China is up, so that gives suppliers a positive motive,” a source told Metal Bulletin.

Another factor driving billet prices upward was expectations of a return to buying activity after the end of Islamic holy month of Ramadan.

“People are back after Ramadan to restock, so demand will be temporarily high,” the source added.

Domestic billet prices in the country went up by 140 yuan ($21) per tonne over the week to reach 3,340 yuan ($492) per tonne on Friday June 30.

The reason for the price rise was the low inventory volume in the spot market.

“Inventory stayed at the low level of 170,000 tonnes this week, so billet sellers had confidence about raising prices,” a local source told Metal Bulletin.

No export offers were heard, however, as traders were waiting for domestic prices to drop before talking to their customers about new orders.

Southeast Asia
“When China is not offering billet, you know the market is firm,” a source in Manila told Metal Bulletin early in the week.

In these conditions, customers in the Philippines procured material from India, Vietnam and Thailand, with most recent bookings done close to $435 per tonne cfr.

The other Southeast Asian markets were quiet this week – notably Indonesia, where market participants were enjoying a week off for the post-Ramadan holiday.

“Many markets [in Southeast Asia] are still on holiday, but the market is moving up because offers have gone,” a regional trading source said on Tuesday, referring to limited supplies at the moment.

CIS, Middle East-North Africa
In the CIS region, billet offers have also been scarce this week, with most mills standing back to assess the market.

Those suppliers which were active have already tried to make the most of the expected uptick in demand.

At the end of the week, offer prices increased to $410-415 per tonne fob Black Sea, from indications of $405 per tonne fob heard early in the week.

A cargo of Ukraine-origin billet was rumoured to have been sold to Egypt, which has recently been the most promising outlet for the semi-finished product, at $410 per tonne fob Black Sea.

However, this information had not been widely confirmed at the time of publication as this market was also on holiday for most of the week.

Previous deals for CIS-origin material were heard concluded in the country at $422 per tonne cfr, or $402 per tonne fob Black Sea.

Meanwhile, in Turkey, Ukrainian material was heard offered at $425 per tonne cfr late last week but without attracting any takers.

Turkish customers continued to concentrate on scrap bookings despite continuing price growth for the raw material.

“With the scrap price currently hovering around $290 per tonne cfr, $425 per tonne cfr for billet is not acceptable for Turkish customers,” a market source said.

Turkish customers were not ready to pay more than $415 per tonne cfr for billet, sources told Metal Bulletin earlier last week.

Juan Weik in Singapore, Jessica Zong in Shanghai, Suresh Nair in Mumbai, Cem Turken in Mugla, Serife Durmus in Bursa and Felipe Peroni in São Paulo contributed to this report.