GLOBAL BILLET WRAP: Market slows on impact of Ramadan, costly Chinese cargoes

The regional steel billet markets mostly fell quiet last week because of the start of the Islamic holy month of Ramadan and the persistence of high export offer prices from China.

The effects of Ramadan have begun to be felt across the Middle Eastern region, as well as in the Southeast Asian economies of Indonesia and Malaysia, while little or no activity has been reported in the export markets of China and the CIS.

Demand is expected to remain subdued in several regions for the next few weeks, with market participants believing that prices will either remain stable or start moving downward soon.

“I think prices will fall by $10-20 [per tonne] in the next 20 days,” a trader based in the Middle East told Metal Bulletin on Friday June 2. He cited not only Ramadan but also the monsoon season in several Asian nations and an expected drop in demand in China, due to the approaching rainy season in some of that country’s regions.

The long steel market was relatively firm in China on May 31, after the end of the Dragon Boat Festival in the country.

There were concerns, however, that some Chinese mills that were shut down for producing substandard steel may resume their rebar rolling operations in the coming months. This is because they are required to dismantle their induction furnaces, but not all of their rolling lines.

Domestic rebar prices dropped in China on both June 1 and June 2 amid growing pessimism on prices, as July and August are seasonally weak months in the country, a Shanghai-based trader said on Friday.

Billet prices in the Tangshan area ended the week at 3,090 yuan ($454) per tonne including VAT, only 10 yuan ($1.47) lower than in the previous week.

Southeast Asia
In the import markets of Southeast Asia, meanwhile, offer prices from China continued to be high, at $430-435 per tonne cfr in Indonesia and Thailand and as much as $445-450 per tonne cfr Manila in the Philippines, in the case of Q275-grade, 120mm billet.

Chinese traders were mainly looking to sell billet at $420-425 per tonne fob, with freight rates at $10-15 per tonne depending on the destination country in Southeast Asia.

Most of the region’s buyers were absent, as business in Indonesia has slowed down with the start of Ramadan, and the rainy season is contributing to reduce already weak demand in Thailand.

Meanwhile, in the Philippines, importers are waiting for import duties for billet from a number of countries to fall to zero from the current 3%, from the middle of June onward. This comes after the government decided to eliminate a most-favoured-nations (MFN) tariff on the product.

By the end of the week, there was news of at least two deals closed for Iranian billet cargoes, one destined for Malaysia and the other for Indonesia, both believed to be for late-July shipment.

An unspecified volume was sold at a price around $395-400 per tonne cfr Malaysia, while around 20,000 tonnes of Iranian material was accepted at around $400-405 per tonne cfr in Indonesia, sources said.

Most offers from Iran have been around $405-410 per tonne cfr in Southeast Asia.

In the Philippines, some buyers would be willing to pay as much as $415-420 per tonne cfr, but no offer prices were heard below $425-430 per tonne cfr.

Cargoes from Thailand were offered as low as $425-430 per tonne cfr early in the week, while material from Russia and even Japan was on offer at $430-435 per tonne cfr, sources in Manila said.

Middle East-North Africa
Iranian billet was also heard sold in the Middle East, with cargoes destined for Egypt and countries along the Persian Gulf.

One big lot comprising as much as 100,000 tonnes would have been accepted at $403 per tonne cfr in member-nations of the Gulf Cooperation Council (GCC), sources said.

In the UAE, offers from Iran were heard at $400-410 per tonne cfr early last week.

The market in Egypt, meanwhile, heard offers at $415-420 per tonne cfr from CIS sources, with deals heard at $410-415 per tonne cfr.

No significant deals were heard in Turkey, with Metal Bulletin’s weekly price assessment for billet imports unchanged at $400-410 per tonne cfr.

Turkish customers were heard bidding around $400 per tonne cfr and less, but offers from CIS suppliers were $410-420 per tonne cfr.

CIS suppliers have sold out most of their June billet output, and have not been active with offers.

Price indications from CIS mills, including ArcelorMittal Kryvyi Rih in Ukraine and Russia’s Novorosmetall, were reported at $400-405 per tonne fob Black Sea early last week.

By the end of the week, however, there were offers heard at $395-400 per tonne fob, indicating weakness in the market, sources said.

Vlada Novokreshchenova in Dnepr, 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.