GLOBAL BILLET WRAP: Price surge fuelled by rally in China, higher scrap costs [CORRECTED]

Steel billet prices in the major markets worldwide continued to rise over the past week, driven by the notable price increase in the Chinese domestic market as well as soaring scrap costs in Turkey.

Metal Bulletin’s daily index for USA-origin HMS 1&2 (80:20) scrap closed at $355.25 per tonne cfr on Friday August 11, up by $26.32 per tonne since Monday, when the index was $328.93 per tonne cfr.

To prevent possible overheating of the scrap market and to replenish depleted billet stocks after active trading in long steel products such as merchant bar, Turkish customers turned to billet imports.

This, in its turn, supported further growth of CIS export billet prices.

CIS, Middle East-North Africa
In the Black Sea basin, billet deal prices moved to $490-515 fob per tonne last week, against $460-470 per tonne reported earlier, supported by growing scrap costs as well as strongly active buying on the part of Turkish and Algerian customers.

Several cargoes of Ukrainian billet were heard sold last week to Turkey at around $490 per tonne fob Black and Azov Seas. The estimated cost of freight to the destination is around $15 per tonne.

Late in the week, a cargo of Russia-origin billet was sold to Turkey at $515 per tonne fob, according to one source.

In Algeria, a booking of Russian billet was done through traders at $500 per tonne fob. The estimated cost of freight to the destination is around $20-25 per tonne.

In Egypt, recent offers of CIS-origin material were heard at $510 per tonne cfr. A source on the buying side said that this price was workable, but no bookings have been heard done in the country so far.

In the UAE, import billet offers from Iran were heard early in the week at $485-490 per tonne cfr and from Oman at $500 per tonne cfr.

A total of around 10,000 tonnes of billet was booked from Oman at $497 per tonne cfr at that time. And later in the week, a rumour started to circulate in the market about a sale of Iranian billet to Oman at $495 per tonne fob.

Meanwhile, billet prices in the Chinese domestic market soared by 250 yuan ($38) per tonne over the week on healthy demand and expectations of reduced supply, ending at 3,850 yuan ($578) per tonne at 3pm on Friday.

The billet inventory was heard to increase by another 20,000 tonnes to around 220,000 tonnes in Tangshan, market sources said.

Some sources heard of Japan-origin second-class billet imported into China at a cost of less than $500 per tonne including 17% VAT. Most market participants believed that this would not indicate a trend, however, as very few re-rolling mills can use Japanese billet.

Southeast Asia
Although no news about billet exports from China was heard, the other suppliers to Southeast Asia followed the upward trend in prices.

Through the week, deal prices in the region moved to $495-510 per tonne cfr, from $485-490 per tonne cfr heard on August 7.

Several cargoes of billet originating from Japan and the Middle East were heard sold in Indonesia at $495 per tonne cfr early last week.

There were some bids heard in the country at a similar price on Wednesday, but by that time there was no supplier willing to sell material for less than $500 per tonne cfr.

In The Philippines, a deal for 150mm 5SP-grade CIS-origin billet was heard concluded at $505 per tonne cfr.

A cargo of Mexican billet was also heard sold to a local re-roller through a trader at $510 per tonne cfr later in the week. However, the total tonnage booked from the Mexican supplier was said to be around 40,000 tonnes, so market participants expected to hear of further bookings with Asian customers in the near future.

Meanwhile, recent offers of billet originating from India, the CIS and South Korea were heard at prices no lower than $530 per tonne cfr.

Jessica Zong in Shanghai, Cem Turken in Mugla, Suresh Nair in Mumbai, Serife Durmus in Bursa and Felipe Peroni in São Paulo contributed to this report.

[The eighth paragraph of this article was amended after publication to give the correct price of $500 per tonne fob for the booking of Russian billet in Algeria, instead of $400 per tonne fob as published originally.]