GLOBAL BILLET WRAP: Prices continue upswing despite slower trading

Global steel billet prices continued their upward march last week, despite the general slowdown in buying activity, Metal Bulletin has learnt.

Prices were supported by stronger fundamentals in the Chinese domestic market as well as relatively firm international prices for scrap and long steel products.

Another supporting factor was reduced availability of billet from the CIS region, which has offset the effect of lower demand from the Middle East-North African (Mena) market.

In Northern China, domestic spot billet prices were moving upward for most of the week, supported by enlivened buying as well as positive developments in the futures market.

At the beginning of the week, active trading led to billet prices surging to 3,230 yuan ($468) per tonne including VAT in Tangshan, up by 90 yuan ($13) per tonne from the previous Friday.

On Wednesday March 15, the price peaked at 3,310 yuan ($480) per tonne as rebar futures rose to a three-year high during trading hours, which sparked bullish sentiment in the spot market.

By the end of the week, the billet price had slipped by some 30 yuan ($4) per tonne after futures tumbled, and fixed at 3,280 yuan ($475).

The pick-up in trading activity in the spot rebar market kept prices from weakening further.

“I’ve received data showing rebar inventory in Beijing decreasing by around 5% to 500,000 tonnes on Friday, compared with a week before. This shows that end-user demand has increased,” a Beijing-based trader said, expecting to see prices rise this week.

In Southeast Asia, the week was also marked by higher billet prices, which have led to a slowdown in buying activity across the region.

Offers for billet from China were heard higher than $460 per tonne cfr in Indonesia and in the Philippines early last week, sources in both countries told Metal Bulletin.

Bids from a few customers in Indonesia were heard at no more than $440 per tonne cfr.

By the end of the week, buying interest in Indonesia was heard as high as $445 cfr, while most offers from the CIS and Turkey were above $450 per tonne cfr.

A Russian billet cargo was also heard booked in the Philippines within the $440-445 per tonne cfr price range.

In Thailand, most re-rollers were giving preference to domestic billet as low local rebar prices made imported billet unprofitable.

Importers were looking at a maximum of $410-415 per tonne cfr for foreign cargoes, sources said.

An Iranian billet cargo, presumably a position trade, was rumoured to be sold around the upper end of the range to Thailand.

Meanwhile, offers for non-Iranian material were all above $440 per tonne cfr in the country.

CIS, Middle East-North Africa
CIS-origin billet prices remained relatively unchanged over the past week, despite the lack of buying activity in the major sales outlet – the Middle East-North Africa (Mena) region.

Reduced availability of the material, in particular from Ukraine, supported other suppliers and left offers hovering within the range of $410-420 per tonne fob Black Sea throughout the week.

A 15,000-tonne cargo of Ukraine-origin billet was heard sold to Egypt at $412 per tonne fob Black Sea early last week.

However, overall demand for semi-finished steel in the country remained limited, with local mills focusing on billet exports.

“Producers prefers to export billets as rebar is not being sold. They need to generate [foreign] currencies to import scrap,” a local source told Metal Bulletin.

In Turkey, CIS suppliers were heard offering billet at $425-435 per tonne cfr, but with customers willing to pay $415 per tonne at the most, Metal Bulletin was told.

However, demand for imported billet was still weak, with mills focusing on the scrap market, Metal Bulletin was told.

In the UAE, billet from Iran was offered at $415-420 per tonne cfr, according to one source, while another heard offers as high as $428-435 per tonne cfr.

Nevertheless, customers gave preference to material from fellow Gulf Co-operation Council (GCC) countries, and this was heard booked at $435 per tonne by a UAE mill.

In South-east Asia, material from Iran, which usually trades at a significant discount to material from other countries, was on offer at a minimum of $440 per tonne cfr in Indonesia, according to market participants.

“Iranian mills are looking for $420 [per tonne] fob now,” one trader said.

However, a buyer source in South-east Asia disputed that information, and said that cargoes from Iran could still be found in the market at prices as low as $425 per tonne cfr.

Even so, Iranian cargoes were not attracting much interest from buyers in South-east Asia because of banking issues arising from trading sanctions in the USA.

Juan Weik in Singapore contributed to this article.