GLOBAL BILLET WRAP: Prices at possible turning point after drop in scrap market

The global billet market showed signs of reaching a turning point last week, as prices in most regions took a downward turn following developments in the Turkish scrap market.

A stronger-than-expected drop in scrap import prices in Turkey surprised market participants and led many customers and traders to expect further drops in the global billet market.

Turkish deep-sea import prices for HMS 1&2 (80:20) from USA and Northern Europe fell by around $15 per tonne on March 21, after a booking of a Canadian cargo in the country.

Sources believe scrap prices may continue to fall, which led to billet prices dropping in most regions, with buyers holding off purchasing to see when the market will hit a bottom.

“I don’t see room for prices to increase again,” a source said.

Billet prices in China started the week with a rise after increased trading activity during the weekend, which was backed by an improvement in the paper market.

But the movement was short lived, as attempts to reduce sellers’ large long steel inventories have influenced rebar prices, and also affected the billet market.

Billet prices in China started falling in the middle of last week, reversing a positive trend seen in the previous days, on the back of lower spot rebar and futures markets.

The billet prices reached a week-minimum of 3,190 yuan ($463) on Wednesday, before a slight rebound on Thursday, when they stabilised at 3,210 yuan ($466) per tonne. 

But sources expected prices to continue falling in the days ahead, as demand for the semi-finished product continued to be weak and pessimism in the overall market was affecting buyers. 

Rebar prices are also believed to be unusually high lately, having surpassed hot rolled coil prices in the country.

“The possibility for rebar prices to fall is high amid the weak demand from end users,” a trader in Shanghai said.

CIS, Mena
Billet prices in the CIS region started the week marginally down, but the weakening of scrap prices has put the market under pressure, according to sources.

Offers from the region are at $405-420 per tonne fob Black Sea, a range which includes prices for Ukrainian material.

But customers in Turkey and Europe were not willing to pay more than $405 per tonne cfr for the product.

Low availability of billet and falling bids for the material have led the market to a standstill. Russian producers were mostly sold out of material and conflict in east Ukraine continues to limit availability in the region.

“No deal was heard in the Black Sea market this week as the market is frozen,” a source said. 

At the beginning of the week, customers in Europe were heard looking for other suppliers as offers prices continued to be high.

Meanwhile, in Egypt, import prices widened upwards during the weak backed by higher Russian offers, while demand remained subdued.

Metal Bulletin’s weekly price assessment for Egyptian billet imports was $415-435 per tonne cfr on Thursday March 23, compared with $415-425 per tonne cfr in the previous week.

But market participants in the country also expect billet prices to fall, following the trend in scrap prices.

In the UAE, the billet import market remained slow, followed by weak activity in the country’s rebar market.

Billet import prices in the region remained unchanged at $415-435 per tonne cfr.

In Turkey, billet prices also took a downturn after new deals were reported from the CIS region and scrap prices weakened.

Turkish sources are expecting further corrections in the billet market, as the reduction in scrap import prices in the country has been stronger than expected.
A sale of CIS material was reported at $415 per tonne cfr in Turkey early last week, but sources were reporting prices as low as $400 per tonne cfr for billet imports some days later.

Despite the decline, buyers were unwilling to accept the new prices and bids were coming at a maximum of $395 per tonne cfr.

“I believe [billet] prices will fall further, in line with scrap,” a Turkish source told Metal Bulletin.

Turkey’s billet export prices also fell to $410-415 per tonne fob, from $425-430 per tonne fob a week earlier, with bookings to the Middle East being closed at the higher end of the range at the beginning of last week.

In Southeast Asia, Turkish offers were heard at around $450 per tonne cfr, although no deals were confirmed.

In Southeast Asia, billet offers fell throughout last week, with weak buying activity and increased pressure from customers to reduce prices.

And market players reported nervousness in the country’s billet and long steel markets after the drop in Turkish scrap prices.

In the Philippines, offers from China were heard at $470-480 per tonne cfr at the beginning of last week, and Thailand-origin material was offered at around $470 per tonne cfr at the same time.

But customers in the country were not willing to accept such prices, and by the end of the week news of at least two bookings of Chinese material were heard in the country, at around $450-455 per tonne cfr.

In Indonesia, there were rumours of one deal closed at around $435 per tonne cfr in the country, but CIS offers returned to previous levels of $440 per tonne cfr.

The increase in billet prices in recent weeks had led to a standstill in the long steel market, as finished steel prices in the region no longer cover the input costs. 

Domestic rebar prices in the country were reported around $500 per tonne delivered, which limited billet deals, as re-rolling costs were reported to be close to $60 per tonne.

Later in the week, sources told Metal Bulletin that a few Indonesian buyers were bidding at $435-438 per tonne cfr. 

In Thailand, buyers have been purchasing billet from domestic producers to avoid previously high import prices, or alternatively buying cargoes from Iran at around $415 per tonne cfr. 

And billet export offers from India were still being heard at $425-440 per tonne fob, a level which buyers would not be willing to pay. Sources said a “workable” price would be closer to $400-405 per tonne fob.

Metal Bulletin’s weekly price assessment for billet exports from India was $400-405 per tonne fob on Friday, down from $425-440 per tonne fob a week earlier.

Juan Weik in Singapore, Vlada Novokreshchenova in Dnepr and Suresh Nair in Mumbai contributed to this report.