GLOBAL BILLET WRAP: Prices keep rising on reduced supplies, higher scrap costs

Steel billet prices had another strong week as supplies of China- and CIS-origin material remained scarce in most markets and scrap costs continued to be strong.

Prices in the Chinese market maintained their upward trend this week, while offer prices from Russia and Iran also continued to rise.

Scrap prices jumped last week, due to reduced availability of European material.

Metal Bulletin’s daily scrap index for HMS 1&2 (80:20) from Northern Europe reached $312.68 per tonne cfr Turkey on Friday, up from $295.94 per tonne a week earlier.

Billet prices in the Tangshan region started the week at 3,410 yuan ($506) per tonne, after a fall of 50 yuan ($7) per tonne over the weekend. But they recovered in the next few days as buyers seized the opportunity to restock.

On Friday, billet prices were 3,470 yuan ($515) per tonne, up by 10 yuan ($1.48) from the previous week.

Inventories of billet in Tangshan were heard to be at 180,000 tonnes, up from 130,000 tonnes in the previous week. Despite the increase, the inventory level was still considered low, according to one market participant.

Sources expected more pressure in the rebar market in the next week, as inventories of that material were heard to be increasing due to bad weather and a summer break at several construction sites.

The strong momentum in domestic Chinese billet prices led most producers to stay out of the export market.

Southeast Asia
With Chinese mills absent from the export market for another week, prices increased again in Southeast Asia as buyers continued to look for supply from other regions.

In the Philippines, buying activity was cooler last week, as clients in the country had secured several cargoes a week earlier.

In the previous week, a booking for Vietnamese material was made in the Philippines at $460-465 per tonne cfr, while Japanese material was reportedly sold at $470 per tonne cfr.

But buyers in the country were looking for prices of less than $470 per tonne cfr, while offers from Vietnam were still heard at $470-480 per tonne cfr.

Late last week, the Philippines market was shaken by a rumour of a 5,000-tonne cargo of Chinese billet sold in the country at around $470 per tonne cfr. The value was considered low for Chinese product, so market participants speculated that it could have been a cancelled order.

In Indonesia, buying interest was reduced, as re-rollers were having difficulties in passing on the increase in prices to customers.

Offers from Iran were heard at around $460 per tonne or higher in both Indonesia and Thailand, but buyers were not willing to pay this price for Iranian material.

Meanwhile, a cargo of 6,000 tonnes of Japanese material was heard booked at $460 per tonne cfr in Indonesia.

CIS, Turkey, Egypt
In the CIS region, prices continued to increase, with low material availability, as most mills were out of the market.

Some Russian mills were heard to be sold out, while others were expecting further price increases before resuming offers.

Buyers, in turn, were heard to be in wait-and-see mode, afraid that a correction in prices could cause losses.

“A lot of our clients say [the state of the current] market is an insanity, [that we should] expect a correction and [that they] do not want to risk [buying] now,” one trader said early last week.

In Turkey, offers from the CIS region were $450-460 per tonne cfr, while buyers were bidding $440 per tonne cfr or lower.

There were rumours of one cargo being sold at $452 per tonne cfr, however.

In Egypt, cargoes from the CIS were sold at $445-450 per tonne cfr in the previous week, but no deals were reported to the country last week.

Also, local rebar producers increased their domestic prices early last week, on strong local demand and higher costs of raw materials.

Later in the week, offers from Ukraine’s Elektrostal were heard at $450 per tonne fob Azov Sea, or the equivalent of $455 per tonne fob Black Sea. This offer was considered too high, however, and the company brought down its price to $440 per tonne fob Azov Sea.

Another Ukrainian company, Arcelor Mittal Kryvyi Rih, gave indications of an offer price for September-production billet of $460 per tonne fob Black Sea.

Iran, UAE, India
An opposing trend was seen when import prices in the UAE went lower this week, due to reduced demand in the southern Gulf country.

An unknown amount of billet from Iran was heard sold at $425 per tonne cfr last week.

But offers continued to rise, and reached as high as $440 per tonne cfr, although this was a price that buyers still resisted.

In India, prices increased by $15-20 per tonne to $440-450 per tonne fob this week. Although no deals were closed, market participants believed that sales would not be possible below this price level.

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