GLOBAL BILLET WRAP: Prices drop on cheaper Chinese, Iranian cargoes

Billet prices have dropped over the past week in most regional markets, in tandem with softening ferrous scrap prices and weaker steel demand in China.

The market was also affected by the return of Iranian exporters after a week-long holiday to mark their country’s New Year, Nowruz, with news of lower prices beginning to be accepted by mills in the Middle Eastern country.

Billet prices will remain under pressure, some market participants said, even though there was no consensus on this view because of signs of a recovery in Turkey’s deep-sea scrap import prices and in China’s domestic billet market.

Local billet prices in China’s Tangshan reached a one-month low of 3,050 yuan ($443) per tonne including VAT on Monday March 28, which encouraged some Chinese traders and mills to look for overseas buyers.

On Monday and Tuesday, there were offers from China at prices as low as $440-445 per tonne cfr in the Philippines, and as low as $430-435 per tonne cfr in Indonesia and Thailand.

Some traders were prepared to sell Russian or Turkish billet as low as $430 per tonne cfr in Indonesia early in the week.

Most Southeast Asian buyers remained on the sidelines of the market, however, as they were expecting prices to drop further.

Contrary to expectations, the Tangshan market strengthened throughout the week, reaching 3,130 yuan ($454) per tonne on Thursday.

This led to higher offer prices from traders by the end of the week, up to around $440-445 per tonne cfr Indonesia and at least $450 per tonne cfr Manila.

Volatility returned on Friday, though, with Tangshan billet prices dropping to 3,100 yuan ($450) per tonne and expectations of further decreases over the weekend as China prepared for public holidays on Monday and Tuesday.

There was news of bids in the Philippines at $440 per tonne cfr on Friday for Chinese billet, while in Indonesia some customers were looking at $420-425 per tonne cfr for May-shipment cargoes and even higher prices for April-shipment material.

By the end of the week, news emerged in Southeast Asia about lower prices for Iran-origin billet.

One booking was heard in Indonesia at only $415 per tonne cfr, while in Thailand prices of $400 per tonne cfr or even lower would have been agreed, sources said.

“The rebar market in Thailand continues to be very weak,” one local trader said on Friday.

The construction season in the country will end in April, but activity has been slow for a while, he added.

Meanwhile, the recent falling price trend seen in the global scrap market sent CIS billet prices downward, with Metal Bulletin’s weekly price assessment dropping by $5-15 per tonne to $385-395 per tonne fob Black Sea on Monday.

Most CIS mills have been almost sold out for April-shipment cargoes, which translated into weak trading activity over the past week as their overseas customers were waiting for a clearer direction in the scrap market.

“The market will be sluggish in the next couple of weeks as everyone is waiting for a clearer trend in scrap,” one CIS source said. “Moreover, there is no need for suppliers to hurry.”

Ukraine’s Elektrostal was offering billet at $380-385 per tonne fob Azov Sea as of Thursday, when it was heard leaving the market as no buyers could be found at those prices.

Such prices would be equivalent to $385-390 per tonne fob Black Sea.

There was unconfirmed news, however, about a deal taking place in Turkey at around $405 per tonne cfr, which would be equivalent to $390-393 per tonne fob Black Sea.

Middle East-North Africa (Mena)
Turkish billet exporters, on the other hand, could target the Black Sea region because of supply disruptions in Ukraine, Thomas Elford, steel trader at UK-based Stemcor, said last week at the Steel Orbis 2017 Conference and 76th Irepas (International Rebar Exporters & Producers Assn) meeting in Budapest, Hungary.

“The reduced availability of long products from the mills in the Dombass region [of east Ukraine is] affecting perhaps 100,000-150,000 tonnes per month of product, and maybe Turkey will step in to fill that gap,” Elford told the trader’s committee of the Irepas meeting.

Metal Bulletin’s price assessment for Turkish billet exports was down by $5 per tonne in the week, to $405-410 per tonne fob.

Import prices in Egypt decreased too, with offers from the CIS reported at $405 per tonne cfr and bids from customers at only $390 per tonne cfr.

“Buyers are aggressive, and it is a buyers’ market just now,” one trader said about the market.

Elsewhere in the Mena region, Algeria was heard to be stepping up its billet imports because of delays in assigning rebar and wire rod import quotas in the country.

Vlada Novokreshchenova in Dnepr contributed to this report.

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