GLOBAL BILLET WRAP: Prices inch up despite weak demand

Steel billet prices moved up last week in most regional markets despite a general weakness in demand for long steel products, with the biggest gains seen in China and Southeast Asia.

Higher offer prices and the effects of defaults from Chinese suppliers on previous deals were the two main reasons for the increase in Southeast Asia, while in China the domestic market has continued to have support from low inventories.

Elsewhere, the Ramadan lull was still affecting demand throughout the Middle East, while the Indian market saw an increase in export activity after several weeks when virtually no business was done.

Rebar prices moved down in China during most of last week, mainly because of sparse trading caused by wet weather in many major markets, such as Beijing, Shanghai, Hangzhou and Guangzhou.

The drop in the futures markets was also pushing down spot rebar prices, while inventories of the long steel product continued to rise in cities such as Shanghai.

Billet prices in the Tangshan market, however, moved in the opposite direction, ending the week at 3,200 yuan ($468) per tonne, 80 yuan ($11.71) higher than on the previous Friday.

The major factors pushing up the price were low inventories and good demand.

“The billet inventory has dropped to a year-low level of 170,000 tonnes in Tangshan, and rebar rolling mills [continue] purchasing billet actively because they still make profit,” a trader in Tangshan said at the end of last week.

As a comparison, billet inventories in Tangshan were said to be around 1 million tonnes early this year.

Southeast Asia
Because of the strong domestic prices, billet export offers from China were at least $420-430 per tonne fob last week, prices considered unworkable in most markets.

In Southeast Asia, import prices moved up last week following news that at least one Indonesian customer had booked a 130mm billet cargo from India at a price close to $425 per tonne cfr.

Indonesia was in a “holiday mood” because of the Islamic holy month of Ramadan and only a few customers were giving price indications at a maximum of $410-415 per tonne cfr, so the reason for the higher booking price from India was believed to be defaults from China.

Some Indonesian buyers suffered defaults on cargoes previously booked from China at only $395-405 per tonne cfr, and one or more of them could have been forced to pay high prices for non-Chinese material, sources explained.

In the Philippines, no deals were heard despite the fact that import duties on billet from all countries have been reduced to zero.

Indicative offers from one major steelmaker with operations in Ukraine and Kazakhstan had been heard at only $420 per tonne cfr Manila, even though some sources dismissed such prices as too low.

The freight cost from the Black Sea to Manila was widely considered much higher than $30 per tonne, and billet prices on an fob basis in the Black Sea were approaching $400 per tonne fob by the end of last week.

Sources in Manila believed that one or more buyers would be able to accept booking prices at $420-425 per tonne cfr, since most offers were above $430 per tonne cfr.

This was the case for an Indian cargo, which was on offer at around $435 per tonne cfr Manila last week, according to sources.

One Indian mill was heard selling as much as 25,000 tonnes of 130mm billet to a trading company at $410 per tonne fob in the middle of last week, up from $400-405 per tonne fob one week before.

Freight from India to Manila was expected to cost at least $20 per tonne, sources said.

“I think the trading company took a long position,” one regional trader source said on Friday, noting that such a price was still high for Southeast Asia.

In the CIS a cargo of Russian billet was rumored to be sold at around $400 per tonne fob Black Sea.

One billet cargo from Ukraine was heard sold just above $400 per tonne fob Black Sea last week, indicating that the market was strengthening.

There was also news of a cargo of Ukraine-origin billet sold to Egypt at $422 cfr on the condition of prompt shipment, with freight costing around $20 per tonne.

In the preceding week, several cargoes of Russia-origin billet were rumoured to have been booked by traders at a little below $400 per tonne fob Black Sea, but the information was not widely confirmed by market participants.

In Turkey, CIS-origin material was available at $415-420 per tonne cfr, a Turkish source said on Friday.

One source outside Turkey, however, said that offers from Ukraine were available at just above $410 per tonne cfr, with deals yet to be heard.

Middle East-North Africa
Metal Bulletin’s weekly price assessment for billet imports into Turkey was unchanged week-on-week at $400-410 per tonne cfr last week.

Demand for CIS-origin billet was sluggish in Turkey, as most mills preferred to buy scrap rather than billet, according to market sources.

In Egypt, import prices moved up last week despite the continuing effects of the Ramadan slowdown.

CIS billet export prices have nudged up since Egypt imposed a temporary anti-dumping duty on rebar from China, Turkey and Ukraine.

In the UAE, meanwhile, no new billet import prices were heard last week, with the weekly price assessment for UAE billet imports remaining unchanged at $395-400 per tonne cfr.

Vlada Novokreshchenova in Dnepr, Jessica Zong in Shanghai, Suresh Nair in Mumbai, Cem Turken in Mugla and Felipe Peroni in São Paulo contributed to this report.