GLOBAL BILLET WRAP: Markets depressed by Chinese prices, lower demand
Steel billet prices dropped in almost all markets last week, affected by falling finished steel prices in China and continued weak buying activity due to the Islamic holy month of Ramadan.
The Chinese billet market weakened last week, motivated by lower costs of raw materials, weaker demand for finished steel and losses in the rebar futures markets early in the week, according to sources.
An increase in billet inventories also added pressure to prices, along with the approaching wet season.
Prices fell significantly last weekend and at the beginning of the week, reaching 2,950 yuan ($434) per tonne on Tuesday June 6.
By the end of last week, the billet price had partially recovered to 2,990 yuan ($440) per tonne, as the paper market became stronger.
In Southeast Asia, buyers were again interested in material from China, after about three weeks out of the market, as reduced prices in the country encouraged trading.
A booking in the Philippines was reported at $420 per tonne cfr Manila early in the week, while offers to Indonesia were heard at as low as $415 per tonne cfr.
“Prices from China suddenly started to drop,” one buyer in Southeast Asia told Metal Bulletin on Tuesday.
Traders were again heard short selling Chinese material in the region, adding more downward pressure to prices.
By the end of the week, traders were offering 150mm grade Q235 billet from China at close to $410 per tonne cfr in Indonesia, slightly lower than at the beginning of last week.
“There are indeed offers at $410-415 [per tonne cfr], but people are hesitant to book,” one Jakarta-based market participant said on Friday.
In Indonesia, the market remained weak due to the Ramadan, and buyers were also waiting to see whether Chinese prices would drop any further.
In the Philippines, offers for 120-130mm Chinese grade Q275 material were around $420 per tonne cfr Manila late last week, but no deals were heard.
Sources also heard offers of Russian 130-150mm 5sp grade billet at $425 per tonne cfr Manila – equivalent to Q275. However, market participants said a deal was unlikely due to the large number of offers for Chinese material at lower prices.
Imports of billet from Russia and several other nations still face a 3% duty in the Philippines, but a new zero rate will apply from June 17 onwards.
At the beginning of the week, buying activity for CIS material continued to be limited due to Ramadan, although some trading was reported in North Africa.
Algeria purchased 5,000 tonnes of billet from the CIS region at $425-430 per tonne cfr, while bookings in Egypt were heard at $413-416 per tonne cfr.
Over the past week, producers maintained price indications at $400-405 per tonne fob Black Sea, but clients were not interested in buying at that price.
Market participants were concerned about lower global billet prices, reduced demand ahead of the wet season in China and the monsoon season in Asia.
Metal Bulletin’s index of CIS billet exports was $396 per tonne fob Black Sea on Monday May 5, down by $1 per tonne from the previous week.
Later in the week, 15,000 tonnes of billet was heard sold to Egypt at about $410 per tonne cfr, with the freight rate estimated at around $20 per tonne.
There were rumours of another sale at around $395 per tonne fob for prompt shipment, to an unknown destination.
Sources in the CIS region believe a viable price level for prompt shipment is $390-395 per tonne fob Black Sea, while material for later production should be at $385 per tonne fob Black Sea.
Billet offers from Iran to the UAE were at $410-415 per tonne cfr last week, but no deals were heard. The material was last booked about two weeks ago at $400-405 per tonne cfr.
In Egypt, billet import prices were virtually unchanged this week, mostly due to import deals from the CIS region.
The Egyptian government imposed temporary anti-dumping duties on rebar from Ukraine, China and Turkey.
Sources believe the restriction will lead to an increase in billet imports from these three countries.
In Turkey, offers from the CIS region were at $410-420 per tonne cfr, but customers were looking to buy the material at prices below $400 per tonne cfr.
Export prices in the country have also fallen, to $420-425 per tonne fob, down from $430-435 per tonne fob in the previous week, following a decrease in domestic billet prices.
Turkish domestic prices are also expected to continue to decrease next week, as the country’s rebar market remains subdued.
Gladdy Chu in Shanghai, Juan Weik in Singapore, Suresh Nair in Mumbai and Vlada Novokreshchenova in Dnepr contributed to this report.