GLOBAL BILLET WRAP: Prices firm but negative sentiment grows

Prices in the global steel billet market remained largely unchanged over the past week, as some customers continued to accept high offer prices.

Nevertheless, the Chinese domestic billet market started to show the signs of weakening due to declining demand for finished steel and growing product inventories.

Besides that Turkish mills expected scrap prices to drop amid strengthening supplies.

In these conditions negative sentiment started to spread in some markets.

Billet prices in Chinese domestic market were yuan 3,720 ($577)per tonne at 3pm on Friday September 15, down 110 yuan per tonne from the previous week. It dropped another 20 yuan per tonne to 3,700 yuan per tonne later in the day.

Growing billet and rebar inventories in the country amid reduced finished steel consumption were the major reasons for the price drop, sources said.

In particular, billet inventories in Tangshan increased to 260,000 tonnes last week, up from the previous week’s 200,000 tonnes, according to a local billet trader.

“The suspension of re-rolling mills which have not changed heating fuel from coal to gas is the major reason for higher inventories and the billet price drop,” a second trader in Tangshan said.

No export offers and deals were heard in the week to September 15.

Southeast Asia

In absence of Chinese billet in the export market meant suppliers elsewhere continued to enjoy demand in some of Southeast Asia’s markets, while prices remained largely firm.

Some market participants reported reduced availability of Vietnamese material in the export market citing good domestic demand and the low availability of material due to previous sales.

However, early last week, a cargo of Vietnamese billet was heard sold in the Philippines at $540 cfr, while on Thursday another booking was reported done at $555 per tonne cfr.

“I do not think we will see deals done higher than $555 per tonne cfr [this week],” a local source said on Thursday, although he added that he expects the uptrend to continue.

Up to four cargoes of Japanese material, of around 6,000 tonnes each, were heard booked in the Philippines at $545-553 per tonne cfr, according to the market sources.

“And there is another tender opening in Japan today,” one trader said on Thursday.

A 10,000-tonne cargo of Taiwanese billet was sold in the Philippines on Thursday at $540 per tonne fob, with the estimated cost of freight between $10-15 per tonne.

In Indonesia, a cargo of Taiwanese billet was booked at $540 per tonne cfr, according to one source.

However, neither trade could be fully verified by the time of publication.

No other bookings were heard in the market, but some market participants said that customers in Indonesia were ready to accept up to $550 per tonne cfr.

“There is demand for billet, but the problem is the price, which is not workable,” a local trader said, citing most offers coming at $560 per tonne cfr.

Offers of the material from Taiwan, India, Oman and Saudi Arabia were heard at $555-560 per tonne cfr in the region. And material shipped from Russia’s Far East ports was available at $550 per tonne cfr. And by the end of the week some small quantities of Thai billet were on offer at $545 per tonne cfr.

Bids from Malaysian customers were heard at $540-545 per tonne cfr.

CIS, Turkey, North Africa
Export billet prices in the CIS region were also strong last week, with offers from Ukraine and Russia largely staying at around $530-540 per tonne.

There was a large cargo of Ukrainian billet sold to Algeria at $550 per tone cfr, or $530 per tonne fob Black Sea, sources told Metal Bulletin.

However, Algeria was the only country in the Middle East North Africa (Mena) region ready to accept this price.

In particular, recent CIS billet bookings in Egypt were done at $535-545 per tonne cfr, against offers of $550-560 per tonne cfr. The estimated cost of freight to Egypt is around $20 per tonne.

In Turkey recent offers of CIS-origin material were heard at $535-540 per tonne cfr, although bids did not exceed $530 per tonne cfr. The estimated cost of freight to the Turkey is around $15 per tonne.

Some market participants voiced expectations of the approaching downward correction referring to decreasing prices in China, the weakening scrap segment and the growing gap between billet and scrap, as well as reduced buying activity last week.

This was despite the shortage of graphite electrodes, used in electric arc furnaces (EAFs) to melt scrap, gaining momentum and putting pressure on steelmakers worldwide.

Additionally, the psychological pressure of an unexpected and unusual situation also contributed to falling sentiment in the market.

“People are worried a bit because they are not used to such a prolonged, stable [period of] price increases,” one trader said.

“Prices have already started to soften and everyone [then] started to offer billet,” another trader said.

Middle East
In the UAE, billet prices went up last week, with a cargo of Omani billet was sold at $545 per tonne cfr, sources said.

Besides that, the availability of import material was reduced.

Offer prices from India were at $520 per tonne cfr, from China at $535 per tonne cfr, and from Bahrain billet was on offer at $538 per tonne cfr.

Meanwhile, Iran was offering billet to the UAE at $542 per tonne cfr.

Jessica Zong in Shanghai, Cem Turken in Mugla, Suresh Nair in Mumbai, Serife Durmus in Bursa and Felipe Peroni in São Paulo contributed to this report.

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