GLOBAL BILLET WRAP: Negative sentiment prevails, Asian markets hold
Sentiment in most of the global billet markets was negative in the week ended Friday August 10 amid unfavorable market conditions.
Most of the buying markets in the Middle East, North Africa and Europe showed a lack of demand during the summer holiday season and weak trading in finished long steel segments.
Meanwhile, Turkey was struggling with the slump of lira value amid aggravated political relationships with the United States. The lira was trading at TRY100 to $18.39 on August 10, compared with TRY100 to $19.82 a week earlier on August 3, according to exchange rate website Oanda.com.
Also on Friday, US President Donald Trump authorized higher Section 232 tariffs on US imports from Turkey, imposing a 20% duty on aluminium and 50% duty on steel.
Such news appalled the Turkish market.
“Nobody can sell anything to Turkey with [a] 50% tariff,” one Turkish long steel producer told Metal Bulletin.
“Turkey now should focus on other export destinations immediately. The domestic rebar market was helping the mills, but with the devaluation in [the] lira, we should shift more material to exports. We can sell more billet to North Africa and maybe [the] Middle East and rebar to Southeast Asia,” another Turkish long steel mill source said.
In such conditions, buying activity in the Turkish import billet market was limited.
CIS-origin material from traders and mills was available to Turkish customers mainly at $510-520 per tonne cfr with bids heard at $505-507 per tonne cfr early in the week.
However, no bookings were done at these levels, with mills preferring to purchase scrap, the prices for which have been on a downtrend recently.
Metal Bulletin’s daily index for Northern Europe-origin HMS 1&2 (80:20) closed on August 10 at $319.46 per tonne cfr Turkey, down from $324.91 per tonne cfr on August 3.
In the second half of the week, a cargo of CIS-origin billet had been sold to Turkey at $490 per tonne cfr, equivalent to $475 per tonne fob Black Sea. But this material was reported to have been produced by a mill in the Donetsk region, part of Ukraine that is currently under the control of pro-Russia separatists and not the Ukrainian government.
Other CIS mils were offering material within the range of $500-505 per tonne fob Black Sea, but these prices were considered too high by customers. Market participants said workable prices for the Middle East-North African markets was within the range of $490-495 per tonne fob Black Sea.
In particular, a cargo of CIS-origin billet was reported sold to Egypt at $515 per tonne cfr at the end of the week, equivalent to $495 per tonne fob Black Sea.
But buying activity was generally muted in the country due to summer holidays as well as expectations of lower finished long steel prices in the near term.
On August 9, Metal Bulletin’s weekly price assessment for domestic rebar in Egypt remained unchanged, with offers coming in at E£12,525-12,528 per tonne ex-works, including 14% VAT.
After the assessment was filed, local rebar producer El Marakby reported a new rebar price of E£12,200.
In such conditions, CIS suppliers were seeking support in Asia, almost the only region where prices remained stable despite the lack of supportive factors.
At the end of the week, several cargoes of Russian billet were heard booked by traders at around $495 per tonne fob Black Sea, with one of the lots destined for Sri Lanka.
Southeast Asia, China
In Southeast Asia, CIS-origin billet was available to customers within the range of $540-550 per tonne cfr. Higher-priced offers were heard for customers in the Philippines, while lower prices were heard for buyers in Indonesia, Thailand and others.
At the end of the week, several bookings of CIS billet were heard made within $545-550 per tonne cfr levels in the Philippines. This was despite the severe congestion at local ports as well as the rainy season in the country depressing demand for billet and for finished long steel since early June.
Meanwhile, customers in other markets of the region predominantly refrained from bookings, receiving lower-priced offers of induction-furnace (IF) billet from India and Vietnam at $535-540 per tonne cfr.
During the week, several cargoes of induction-furnace billet were booked in the region at as low as $530-535 per tonne cfr.
But prices for Indian IF billet are expected to edge up soon amid India’s improving domestic market. “So we might possibly see import prices in Southeast Asia being pushed up,” a Singapore-based trader said.
Recent alternative offers of materials made in blast furnaces (BF) or electric-arc furnaces (EAF) from the Middle East, India, Japan, Taiwan and Vietnam ranged from $545-560 per tonne cfr in the region.
No offers of Chinese billet were heard in the region, with Chinese suppliers enjoying high profit in the domestic market and exporters concerned about customs inspections.
China’s domestic billet prices were 3,910 yuan ($572) per tonne on Friday, up by 60 yuan per tonne from a week earlier due to tight supply caused by steel production cuts in the country, enforced to satisfy environmental protection regulations.
The inventory for the semi-finished product in Tangshan was 315,000 tonnes on Friday, down by 15,000 tonnes from the previous week, a billet trader in Tangshan said, quoting a local industry information provider.
Based on domestic prices, Chinese export offers for billet would be around $535 per tonne fob, an export trader in eastern China said. No export deals were heard during the week.
Iran, Gulf Cooperation Council Countries
Iranian billet also was not heard traded in the global market this week due to the re-imposition of US sanctions on August 7.
Recent offers were heard at $500-505 per tonne fob, which would be equivalent to $525-530 per tonne cfr in Southeast Asia.
“Buying interest for Iranian semi-finished steel is still there due to the price being very competitive, but I do not think that many will dare to buy because the sanctions will make the procurement process much longer and will probably increase the cost eventually,” an Indonesian source told Metal Bulletin.
Some trading companies in Asia, however, were ready to continue to trade with Iran, considering that they do not have connections with US-related banks and that they trade with Iran in currencies other than US dollars.
The sanctions are intended to prohibit states and companies which deal with the US from trading with Iran in any steel products, including semi-finished and finished steel.
Southeast Asia (Thailand, Taiwan, Indonesia and the Philippines) and the Middle East-North Africa region (the United Arab Emirates, Oman and Egypt), were the major outlets for Iranian steel.
Market participants varied in their forecasts for the future of Iran’s steel exports after the reintroduction of the sanctions. Some believed that the overall volume may be reduced by more than half, while others believed that there would be no significant drop. What has become clear so far is that Iranian exports will not be entirely eliminated.
“Iran was purchasing steel through the UAE when it was under sanctions in 2015, and I believe it will find a way to re-establish trade when the new sanctions are imposed,” a Middle East-based buyer of Iranian billet told Metal Bulletin.
“All in all, the UAE needs Iranian billet as much as Iran needs the UAE market to sell it,” he added.
No offers of Iranian billet were heard this week in the UAE.
Oman offered billet at $535 per tonne cfr to the country, but no major deals were heard.
Demand for finished long steel was weak in the UAE in the past week and is unlikely to improve before the end of August, because of the summer holiday season and the Hajj and Eid al Adha religious celebrations late in the month.
Jessica Zong in Shanghai, Fiona Lam in Singapore, Cem Turken in Mugla, Felipe Peroni in Sao Paolo and Suresh Nair in Mumbai contributed to this report.