GLOBAL BILLET WRAP: Markets widely quiet on religious holiday

The global steel billet markets remained basically stable in the week from Monday August 20 to Friday August 24, with prices in Southeast Asia and the CIS region continuing to soften on the fallout from the weakening of the Turkish lira.

Islam’s Eid al-Adha religious holiday, which lasted all week, essentially closed the markets in Turkey and many other Muslim countries.

At 3pm on Friday, billet was being traded at 4,060 yuan ($590) per tonne including VAT in Tangshan, up by 20 yuan per tonne week on week.

Inventory for the product in Tangshan was 300,000 tonnes on Friday, up by 20,000 tonnes from a week before, a billet trader in Tangshan said, quoting a local industry information provider.

The increase in the inventory was because of the weak demand from re-rolling mills. Billet prices reached 4,110 yuan per tonne on August 20, which made re-rolling mills lose money and reduce production. It also caused softer billet demand in the country.

Although no export offers were heard this week, market sources calculated that export offers would be around $535-540 per tonne fob, based on domestic prices.

Turkey, Commonwealth of Independent States
The CIS export billet market was largely quiet last week, with buying activity generally soft due to the religious holiday in Islamic nations.

Customers in Turkey and other parts of the Middle East, as well as North Africa, were almost entirely absent during the week to celebrate the Eid al-Adha.

Those few who remained active were not ready to pay more than $470 per tonne fob Black Sea for CIS-origin steel billet. But this was a price that the mills were trying to stay above, with offers varying within the range of $480-485 per tonne fob Black Sea.

“Nobody wants to be the first mill to sell at such a low price [as $470 per tonne fob],” one trader said.

“We have received bids at $470 per tonne fob Black Sea,” a Russian producer said, “but we are not interested because we are in no hurry to sell, so our offer is $485 per tonne fob.”

Given this situation, CIS producers sought support in the Asian markets, which were ready to accept somewhat higher prices.

Several cargoes of Ukrainian billet were reported sold to Asia at $475 per tonne fob Black Sea.

A Russian producer sold a cargo to the Philippines at $530 per tonne cfr, which was equivalent to around $485 per tonne fob Black Sea.

On August 23, market sources reported a cargo of Belarus-origin billet being sold at $470 per tonne fob Black Sea to a Middle East-based trader. The material is to be shipped in November, while most other producers were offering material for shipment in October.

It should be noted, however, that the producer involved usually sells material on a prepayment basis. If the price were to be normalized to a value without prepayment, and for an earlier month of shipment, it would be equivalent to $475 per tonne fob Black Sea.

Southeast Asia
Import prices for steel billet in Southeast Asia remained weak with the major supplier, Turkey, being on holiday.

Import prices for the product in Southeast Asia had been falling amid the lower offers that emerged from a weakening of the Turkish currency.

The lira was trading at TRY100 to $16.41 on August 24, compared with TRY100 to $20.38 on August 1 and TRY100 to $26.39 on February 24.

There were no reports of Turkish mills and buyers in Southeast Asia negotiating any transactions last week. Offers of Russian products were heard at $530-535 per tonne cfr Manila.

Billet produced in induction furnaces (IFs) in India was heard offered at $535-540 per tonne cfr to the Philippines, while similar products from Vietnam were offered around $545-550 per tonne cfr.

But the availability of cheaper Turkish electric-arc furnace (EAF) billet made buyers lose interest in IF products, which typically are of inferior quality by comparison.

Demand was also thin because buyers in the Philippines only returned from their one-day break for Eid al-Adha late in the week, and were mostly staying on the market sidelines in anticipation of more concrete news from the Turkish steel market.

“Moreover,” a trader in the Philippines said, “downstream demand for rebar from the building and construction industry has been poor.”

Fiona Lam in Singapore, Vlada Novokreshchenova in Dnepr, Jessica Zong in Shanghai and Suresh Nair in Mumbai contributed to this report.