GLOBAL BILLET WRAP: Prices fall amid weakening demand

Prices in most billet export markets were heading down in the week to Friday October 27, amid weakening demand for both semi-finished and finished steel products.

“There is little buying activity now due to the poor demand as the winter season is coming,” one trader said.

Aggressive sales tactics by Iranian suppliers added to the downward sentiment.

The Iranians sold a number of billet cargoes to the Middle East and North Africa (Mena) region, as well as to Asian buyers, at $460-470 per tonne fob this week.

And a source in Turkey said that Turkish mills were also still concentrating more on selling than buying.

“Turkey is getting further into panic and I think prices will go down in the short term,” he said.

In Asia, market participants discussed the possibility of increasing billet shipments from Iran, as the country plans to raise steel export volumes in the run up to the end of the current Iranian year on March 20, 2018.

"[Billet] export volumes from Iran [to Asia] may increase by as much as 25% in the mid-term, reaching 750,000 tonnes,” a trader based in northeast Asia said.

Southeast Asia
In the short-term, demand for import material in Southeast Asia is expected to be moderate due to lower consumption by rebar producers at the end of the year.

Together with falling futures prices in China, this has led to a fall in billet prices.

The workable billet price was $508-515 per tonne cfr, according to market participants, down by $2-5 per tonne over the week.

“Billet prices have dipped lower this week due to weak demand from the downstream rebar market, and it does not look like [there will be] any strong rebound soon,” a trader based in Southeast Asia told Metal Bulletin.

Customers were predominantly bidding $500 per tonne cfr, while import material offers in the region remained unchanged at $520 per tonne cfr.

Most of the billet on offer was from Russia, the Middle East and India, sources said.

No Chinese export offers were heard in the market.

In the domestic market, Chinese billet prices were trending upwards for the most of last week supported by production cuts at steelmaking and cement-producing mills.

The week started with a 70 yuan per tonne rise, to 3,730 yuan ($562) per tonne on Monday October 23, moving up another 40 yuan per tonne on Tuesday.

On Thursday, the price dipped 30 yuan per tonne, and eventually ended the week at 3,740 yuan – up by 80 yuan compared to October 20.

Although prices were high last week, demand remained sluggish because of the transportation restriction in Tangshan.

Indian suppliers also faced reduced demand for steel billet in the domestic market.

The country has stopped exports to Nepal, totaling around 50,000 tonnes per month in August, due to political uncertainty in the region, a source told Metal Bulletin.

Therefore, Indian suppliers were targeting new export markets – North Africa in particular – trying to compete with CIS suppliers.

Some offers of Indian billet were heard in Egypt at $500-505 per tonne cfr this week, in line with CIS material.

However, a 20,000-tonne cargo was reported booked at $485 per tonne cfr, according to two market participants.

Another source said that the presence of Indian suppliers in the region will be short-lived, referring to the end of the financial year in the country and attempts to reduce inventories.

Another source said that demand in Egypt has recently fallen and that local producers have started exporting material.

No deals for CIS-origin material were reported in India.

CIS, Middle East, North Africa
CIS exporters faced reduced demand not only in Egypt, but also in across most of the Mena region.

Algerian buyers having been looking to purchase around 30,000 tonnes of CIS billet since the middle of the month, but no deals have been finalised as the customers are constantly reducing their bids in the weakening market.

By the end of the month, when the downward trend became more distinct, interest began to fade.

CIS mill offers varied within the range of $480-500 per tonne fob Black Sea over the week, compared with $490-505 per tonne fob a week earlier.

“The market is falling so customers are not bidding,” one trader said.

Meanwhile, a cargo of Ukrainian billet was heard sold to Turkey at $490 per tonne cfr.

Small cargoes were reported sold into Turkey at $500-505 per tonne cfr early in the week.

Some market participants even expect billet prices to increase in the near term, spurred by the rebound in scrap prices.

Metal Bulletin’s daily scrap index for Northern Europe-origin HMS 1&2 (80:20) scrap was $300.94 per tonne cfr on October 27, up by $5.68 per tonne.

A steel mill in the Izmir region booked a European cargo, comprising 22,500 tonnes of HMS 1&2 (75:25), 2,500 tonnes of shredded and 5,000 tonnes of bonus at an average price of $303 per tonne cfr.

Meanwhile, a mill in the Iskenderun region booked a Baltic Sea cargo, comprising 16,000 tonnes of bonus-grade scrap at $315.50 per tonne cfr.

“Scrap prices are showing signs of recovery,” a Turkish source said. “The offer prices are rising in line with higher collection and freight costs,” he added.

Jessica Zong in Shanghai, Paul Lim in Singapore, Cem Turken in Mugla,Serife Durmus in Bursa and Felipe Peroni in Brazil contributed to this report.

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