GLOBAL BILLET WRAP: Prices continue to climb on limited supplies, low raw materials costs

Prices continued to rise in most steel billet markets over the past week, due to reduced supplies, a continued uptrend in China and high raw materials costs.

Ferrous scrap costs in Turkey remained strong this week, while mills are starting to look for alternatives to achieve lower prices.

shortage of graphite electrodes for use in smelting has also been adding pressure to billet markets, sources told Metal Bulletin.

Costs for graphite electrodes have soared in recent months due to a lack of availability from China, after environmental inspections led to suspension in operations of various suppliers of the material.

Turkish companies were taking measures to conserve electrodes, such as extending their use and purchasing billet from Europe to mitigate the rising costs.

Billet prices in China reached 3,830 yuan ($589) per tonne on Friday September 8, up by 70 yuan from the previous week.

Most of the increase occurred over the weekend and early in the week, led by high demand. 

Late in the previous week, a fire at one of the country’s long steel rolling mills, Benxi Iron & Steel, affected market sentiment and pushed steel futures up.

Ongoing environmental inspection and air pollution controls are pushing down the supply of billet, and market participants don’t believe a correction is likely to happen. 

Air pollution inspections started on September 1 in Beijing, Tianjian and another 26 cities.

But the ongoing controls also affected demand billet, as some-re-rolling mills were said to be stopping production due to the controls.

Inventories of billet in the Tangshan region remained stable at around 200,000 tonnes.

On the export side, no offers or deals of billet were reported last week. Current domestic prices would be equivalent to export offers of around $540-550 fob.

“I haven’t offered [billet to the export market] for a few weeks,” a source in China said.

Southeast Asia
Import prices in Southeast Asia also went up due to the absence of Chinese material, as buyers were looking for suppliers in other regions.

Market participants also reported reduced availability of billet from Vietnam, caused by increased demand for long steel products in the country’s domestic market.

One cargo of 6,000 tonnes of Vietnamese billet was booked in the Philippines at $550 per tonne cfr. After that, offers moved to $560 per tonne cfr.

Traders were considering launching offers of India-origin material to the Philippines at as much as $585 per tonne cfr.

In Indonesia, Indian material was offered at $560-565 per tonne cfr. Offers of 4sp-grade billet from India were also heard at $515-520 per tonne fob, or the equivalent to $540-545 per tonne cfr.

CIS, Turkey, North Africa
Offers from CIS mills were also affected by electrode shortages and the expectation of improving demand and prices.

Early last week offers from CIS mills were heard at $520-530 per tonne fob Black Sea, while deals were done at $515-520 per tonne fob Black Sea.

Bids from Turkey came in at $510-515 per tonne cfr, or $495-500 per tonne fob, while Algerian and Moroccan clients were bidding $535-545 per tonne cfr, or $510-520 per tonne fob.

Later in the week, offers from Russian mills reached around $540 per tonne fob.

“Maybe next week mills will get [$540 per tonne fob],” a source said. 

In Egypt, there was little activity.

Market participants in Egypt said $520 per tonne cfr was a viable price, but no bookings were heard.

In Turkey, higher offers from the CIS were forcing buyers to prefer the domestic billet market or to purchase scrap, as the country returned to the market after its Victory Day and Hajj celebrations.

Sources said that a workable price would be closer to $510-520 per tonne cfr, lower than CIS offers. 

Meanwhile, billet offers in the domestic market in Turkey were about $520-530 per tonne ex-works, while export offers from the country were around $545-550 per tonne fob.

Jessica Zong in Shangai, Vlada Novokreshchenova in Dnepr, Lee Allen in London and Nadia Popova in Moscow contributed to this report.