GLOBAL BILLET WRAP: Price reductions intensify ahead of Chinese holidays

Steel billet prices fell in almost all regions last week, following the downtrend in scrap and a weakness in Chinese domestic market.

Deals for ferrous scrap in Europe and North America were done at lower prices, with mills unsure when prices will hit a bottom.

Metal Bulletin’s daily Ferrous Scrap Index for North Europe-origin HMS 1&S (80:20) fell to $295 per tonne cfr Turkey on Friday September 29, from $315.72 per tonne cfr Turkey a week earlier.

Market participants in Egypt expect billet prices to continue to come under pressure, due to the gap between scrap and billet prices.

Billet prices in China had fallen until the beginning of last week, as bad weather in most regions of the country kept trading activity into a minimum in both the steel billet and long steel markets.

Prices for the semi-finished product reached 3,500 yuan ($525) per tonne ex-works last Monday, down from 3,620 yuan per tonne on Friday September 22.

However, on Wednesday, an increase in buying activity saw billet prices recover to $3,530 yuan per tonne.

But later in the week, prices dropped to 3,480 yuan per tonne as stockists tried to clear inventories before the start of China’s week-long National Day holiday.

The Chinese rebar market was also weak due to expectations of a strong drop in demand after the holidays as local governments in northern China will implement a suspension of construction activity.

The Tianjin city government is expected to impose a ban on earthworks in urban areas until March, while Beijing is set to follow suit from mid-November.

Later last week, export offers from the country were reported at $520-550 per tonne fob, but no deals were heard at that level.

However, an export deal for Chinese steel billet, closed via traders, was reported at $500 per tonne fob.

Southeast Asia, India
In Southeast Asia, billet prices continued to decline last week as market participants saw a return of Chinese offers.

Offers of billet from China were heard in the Phillippines at $530 per tonne cfr, while Indian producers were offering billet at $535 per tonne cfr.

On Friday, prices were assessed at close to $520 per tonne cfr in the Phillippines, according to a source in China.

A bid for Chinese material was heard from Indonesian buyers at $500-505 per tonne fob, whereas bids from Southeast Asian countries had been as high as $535-540 per tonne cfr in the previous week.

In India, a mill launched a tender for billet, but withdrew the offer as the bids received were far lower than expected.

Bids were received at a maximum $470-475 per tonne fob, while producers said they would not accept less than $520 per tonne fob.

CIS, Middle East and North Africa
In Egypt, the market was affected by news that the ministry of trade had extended existing anti-dumping duties on rebar from China, Turkey and Ukraine for two months on Tuesday.

The country imposed the duties on rebar on June 6 for a four-month period, and the measure was one of the factors spurring demand for imported billet in recent months.

But the duty extension was not enough to reverse the downtrend in Egypt billet import prices.

Market participants believed billet prices were already too high, and that a correction was inevitable.

CIS producers were heard offering to Egypt at $520-530 per tonne cfr, or around $500-510 per tonne fob Black Sea.

This is lower than in the previous week, when CIS producers were offering billet at $520-530 per tonne fob Black Sea to most destinations.

In Turkey, bids and offers dropped due to the fall in scrap import prices.

Offers from CIS-mills to Turkey were heard as low as $510-520 per tonne cfr, or the equivalent to $495-505 per tonne fob Black Sea.

But buyers were only willing to pay $490-495 per tonne cfr for the product. 

Rebar producers with electric arc furnaces (EAFs) continued to face shortages of graphite electrodes, which led to a further increase in demand for billet.

High scrap prices could last until the middle of 2019, according to Murat Cebecioglu, export manager at Turkish long steelmaker Icdas. 

Jessica Zong in Shangai, Suresh Nair in Mumbay, Vlada Novokreshchenova in Dnepr, Serife Durmus in Bursa, Lee Allen in London and Viral Shah in London contributed to this report.