GLOBAL BILLET WRAP: Prices drop in most markets on low offers from Turkey

Most global steel billet markets were shaken by a surge of low-priced offers from Turkey in the week from Monday August 13 to Friday August 17, a reaction to new tariffs imposed by the United States against imports of Turkish steel.

The Middle Eastern country, which previously imported billet, resumed export offers but at much lower prices. Buyers have shown interest in this material in most regions, while the competition forced mills in the CIS to reduce their own offers or stay on the market sidelines.

The only exception was China, where production controls seem to have affected inventories and have led to new price increases for the semi-finished material. Chinese mills remained out of the export market, however, due to the price difference.

Turkey, Commonwealth of Independent States
The imposition by the US of 50% duty on steel products from Turkey led the country’s producers to focus on exporting materials to other destinations.

The situation was aggravated by the loss in value of the Turkish lira, which was trading at TRY100 to $17.02 on Friday, against TRY100 to $20.38 on August 1.

Turkey, which was previously an importer of CIS-origin billet, has started offering low-priced semi-finished material to most buying markets.

Market participants reported that Turkish material was being offered at prices as low as $485-490 per tonne fob on August 14.

Turkish material was available not only in the Middle East-North Africa (Mena) region, but also in Southeast Asia.

Billet prices from the CIS weakened last week because producers had to reduce their offers to compete with low-priced material from Turkey.

One Russian mill was offering export billet at $495 per tonne fob to traders late last week, while some traders reported offers of $490 per tonne fob Black Sea from CIS mills – although this was still higher than Turkish prices.

In the Philippines, Turkish billet was offered at $535-540 per tonne cfr, while material from CIS mills was heard at $545 per tonne cfr.

“There is demand for Turkish material from everywhere – from Morocco to Algeria and even Thailand,” a Turkish mill source said.

In this situation, some CIS producers reduced their offers, while others preferred to step back from the market to see how the situation will develop.

“I guess we need to wait and see for a week, or even two, before offering,” a Ukraine-based producer told Metal Bulletin.

In Egypt, prices also dropped due to the increased presence of low-priced Turkish material.

Billet offers from Turkey reached Egypt at $507-515 per tonne cfr, while material from the CIS was priced $520-525 per tonne cfr.

These prices were considered viable by market participants, but buyers were not in a hurry to book because of the imminent Eid al-Adha religious holiday.

Metal Bulletin will not publish certain price assessments for steel and ferrous scrap during August 20-24, due to this holiday break. Normal publishing schedules will be resumed in the week beginning August 27.

China, Southeast Asia
Billet prices in China’s northern Tangshan region reached 4,040 yuan ($592) per tonne ex-works on August 17, an increase of 130 yuan per tonne from the previous week, due to reduced inventories.

Billet inventories in Tangshan were reported at 280,000 tonnes late last week, down by 35,000 tonnes from a week earlier, according to a billet trader which quoted a local industry information provider.

Talks of output restrictions to be implemented in China led billet prices to rise several times over the week.

China has extended the duration of production cuts for its steel industry in the winter heating season by two months this year. This will begin on October 1 and end on March 31 next year, in 28 cities in northern China, according to a draft pollution control plan released earlier this month.

No export offers were heard last week, with companies focusing on domestic prices. Based on domestic prices, market sources calculated that export offers would be equivalent to $535-540 per tonne fob.

In Southeast Asia, prices were unchanged in the week that ended on August 13, but market sources were already expecting prices to fall.

Metal Bulletin’s daily assessment of Southeast Asia billet imports fell to $535-540 per tonne cfr, from $545-550 per tonne cfr in the previous week.

A trader said it would not be a surprise to see offers from Turkey reaching Indonesia at $530 per tonne cfr “soon”.

Iran, United Arab Emirates

Iranian suppliers followed the downward trend in global billet markets and decreased their offer prices last week.

Recent billet offers from Iranian mills for shipment in September and October were reported varying within the range of $480-485 per tonne fob, market participants said.

But sources believed these prices were still too high, considering the problems created by the renewed trading sanctions imposed on the country by the US government.

With Turkish material available at $485 per tonne fob, sources believed that Iranian prices should be $470-475 per tonne fob for bookings to be made.

In the United Arab Emirates, billet imports also slowed down because the religious holiday is close. Market activity is expected to improve only in September.

Fiona Lam in Singapore, Vlada Novokreshchenova in Dnepr, Jessica Zong in Shanghai, Cem Turken in Mugla, Serife Durmus in Bursa and Suresh Nair in Mumbai contributed to this report.