GLOBAL BILLET WRAP: Market seeking direction amid diverging influences

Prices in the international steel billet market moved in different directions in the week ended Friday May 18 with the factors influencing market decisions varying from region to region.

Suppliers in the CIS region were bullish, suggesting that Iran will not be able to sell its semi-finished products as it has been doing because of the threatened reimposition of sanctions by the United States after it withdrew from the international nuclear-power deal with the Middle Eastern country.

In addition, a stoppage of production at Ukraine’s ArcelorMittal Kryvyi Rih on May 16, because of workers’ protests, was expected to affect the availability of long steel products, particularly billet, in the CIS region. This could push prices further upward.

Chinese billet suppliers were optimistic, because they enjoy steady demand in their domestic market at the moment.

Meanwhile, in Southeast Asia, buying activity was quiet, with most customers considering current prices to be too high and preferring to wait for a better idea of the market direction.

At the same time, the market in the Middle East is essentially inactive due to the beginning of the Islamic holy month of Ramadan, which is traditionally marked by reduced commercial and industrial activity.

And Turkish market participants face a fall in domestic long steel prices, including billet, because the country’s lira is weakening against the dollar and there is lower domestic demand for finished steel products.

Turkey, CIS, Middle East-North Africa
Domestic billet prices in Turkey weakened, with mills reducing their offers for the material under pressure from falling rebar and scrap costs.

On top of this, the effects of political uncertainty, the weakening lira and the Ramadan lull have reduced demand and prices, a Turkish source said.

Offers of billet in the Turkish domestic market were heard at $530-535 per tonne ex-works, against $535-540 per tonne ex-works in the week before.

Given these conditions, Turkish steel mills showed no interest in CIS billet, because they were able to buy domestic billet at lower prices.

CIS billet was available for export within the range of $520-535 per tonne fob Black Sea. Considering the estimated cost of freight of $15 per tonne, that would be equivalent to $535-550 per tonne cfr in Turkey.

But Turkish customers were ready to pay only $520-525 per tonne cfr.

“Sentiment in Turkey has definitely changed to negative, due to problems with domestic demand and the lira’s drop in value,” an international trader told Metal Bulletin.

Egypt, another large outlet for CIS billet, also reduced its intake.

“Our clients bid $515-517 per tonne fob Black Sea now,” a source trading CIS-origin billet to the country told Metal Bulletin, while noting that $520 per tonne fob Black Sea may be achieved.

But at least one CIS-origin cargo was reported sold at $545 per tonne cfr Egypt, or $525 per tonne fob Black Sea, during the week.

CIS mills in their turn were targeting prices of $525-530 per tonne fob Black Sea and higher, citing the stoppage of pig iron and steel production at ArcelorMittal Kryvyi Rih.

“I don’t think we’ll be selling below $525 per tonne fob,” another Ukrainian producer told Metal Bulletin. “On Monday, we will probably increase the price to $530 per tonne fob Black Sea or higher.”

Another factor supporting the optimism of CIS suppliers was the expected reimposition of US sanctions on Iran, which may result in reduction or even a complete stoppage of steel exports from the country. This in turn may influence the availability of billet in the global market.

Because of this, customers rushed last week to book Iranian billet for July delivery, fearing that purchases with later delivery dates might be hindered by subsequent banking issues.

Several cargoes of Iranian billet were heard sold to Gulf Co-operation Council (GCC) countries within the range of $490-503 per tonne fob.

Recent billet offers from Iranian suppliers were reported within the range of $500-510 per tonne fob.

Southeast Asia, China
In Indonesia, Iran-origin billet was available last week at $530-535 per tonne cfr, equivalent to $500-505 per tonne fob, considering an estimated cost of freight of around $30 per tonne.

No bookings were heard done at the time of publication, however, despite the fact that Indonesian customers are currently only willing to accept the prices asked for Iranian material because products from other origins are too expensive for them.

Material from the GCC countries was available to customers in Indonesia at $545 per tonne cfr last week.

Some Indonesian and Thai buyers voiced their intention to continue buying from Iran because they do not have any links to the US. And South Korean customers were also refraining from deals with Iran.

Meanwhile, customers in the Philippines booked CIS and East Asian billet at prices within the range of $550-555 per tonne cfr.

There were no export billet bookings from China last week, with sellers there concentrating on the domestic market, where the price was 3,630 yuan ($571) per tonne ex-works on May 18. This was up by 50 yuan ($7.85 per tonne ) week-on-week.

Market participants estimated export offers for Q235-grade 150mm Chinese billet at $530-535 per tonne fob, unchanged from the previous week, but this price was not accepted by overseas buyers.

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