GLOBAL BILLET WRAP: US withdrawal from Iran nuclear deal to change dynamics in Gulf market

Steel billet prices in the global markets showed mixed dynamics during the working week from Monday May 7 to Friday May 11.

The decision by the United States to withdraw from the international nuclear-power deal with Iran was expected to decrease the supply of the semi-finished material in the Gulf region, while CIS-region suppliers could see this as an opportunity.

Turkish market remained quiet due to weak rebar demand in the country’s export markets, while the approaching Islamic holy month of Ramadan was expected to reduce demand in most Muslim-nation markets.

China
Billet prices in China were 3,580 yuan ($564) per tonne on May 11, 80 yuan per tonne lower than the previous Friday.

The inventory for the product in Tangshan was 480,000 tonnes on Friday, down by 40,000 tonnes from a week before, a billet trader in Tangshan said, quoting a local industry information provider.

None of the exporters in the country were offering material because buyers were not interested in Chinese billet, according to the sources.

The offer price for Q235-grade 150mm billet was calculated by Metal Bulletin at $530-535 per tonne fob, down by $5 per tonne from the previous week.

Southeast Asia
Import prices for steel billet in Southeast Asia continued to rise over the week due to lower supply and costlier Chinese cargoes.

Deals involving cargoes from Taiwan and Thailand were heard concluded at around $555-560 per tonne cfr to the Philippines late last week, up from the $540-555 per tonne cfr transactions a week earlier.

A small shipment of Qatar-origin billet, re-exported from Vietnam, was sold into Manila at $549 per tonne cfr.

Billet availability was limited during the week, especially given the strong Chinese and Indian domestic markets.

Offers from South Korea and Central Asia were heard in the Philippines at $555-560 per tonne cfr.

Middle East-origin billet was offered at $550-560 per tonne cfr, up by $5-15 per tonne from the preceding week.

Chinese offers reached $560-570 per tonne cfr on Friday, up by $10 per tonne from a week earlier. China’s domestic billet prices improved during the week amid lower inventory levels.

“Offers from other origins are moving up following the upward momentum in China’s prices,” an India-based trader said.

Demand in the Philippines increased slightly because some buyers needed to replenish their inventory levels, even though the June monsoon season was expected to reduce demand.

Bids at $550 per tonne cfr were heard from the Philippines, while other buyers who were not in a rush to procure indicated their interest at $540-545 per tonne cfr.

In contrast, Indonesia’s procuring interest remained muted for both billet and slab, partly because imports were costlier due to the depreciation of the Indonesian rupiah.

Indonesian demand was also depressed amid the country’s slow finished steel products market and the upcoming Islamic holy month of Ramadan, which starts in mid-May.

“Construction projects are slowing down as Ramadan approaches, and re-rollers still have plenty of rebar inventory,” an Indonesia-based trader said.

Re-rollers indicated their interest for billets at $520 per tonne cfr, he added.

No bookings were reported in Indonesia, except for Iranian materials. A cargo from Iran was sold to Indonesia at $530-535 per tonne cfr.

CIS, Turkey

Prices in the CIS export billet market continued to climb last week with some customers accepting the higher prices offered by the mills.

Several billet cargoes were sold to North Africa within the range of $515-520 per tonne fob Black Sea.

Market participants also reported a sale of billet from Russia at $520 per tonne fob, but the details of the deal could not be confirmed at the time of publication.

In these conditions, CIS suppliers continued to push prices further upward. But buyers in Turkey were still quiet and showed no interest in billet or scrap purchases last week.

Turkish billet prices remained stable over the week with demand for material being very limited.

The billet mills in the CIS region tried to increase their offer prices for Turkey, in line with the uptick in Turkish imported scrap prices. But, due to poor demand for rebar, none of the customers in Turkey were willing to buy billet at a higher price.

“The mills [in the CIS region] tried to raise their offers to $530 per tonne cfr but failed to sell at that price,” a trading source said.

Billet offers from the CIS therefore remained unchanged at $525-530 per tonne cfr.

Meanwhile, domestic and export billet prices in the Middle Eastern country also remained steady last week.

Middle East, North Africa
Prices for billet imports into the United Arab Emirates went down over the week due to poor demand.

The market also was expected to remain slow in the coming weeks because of Ramadan, when working hours are reduced.

Iran offered billet at $515-520 per tonne cfr, but a buyer was bidding $490-495 per tonne cfr.

“We are not planning to buy at more than $495 per tonne cfr. Demand is not good [because] Ramadan is coming,” one buyer said.

Prices for Iranian exports of steel billet increased in the week, with new deals reported by market participants.

Market sentiment was negative because of US President Donald Trump’s announcement that the United States would be withdrawing from the multi-lateral nuclear pact with Iran, with plans to reinstate trade sanctions.

But the UAE is expected to continue buying from Iran in th same way that it was trading before sanctions, and the UAE needs Iranian billet, although other countries will probably back off.

Recent bookings for a total of more than 50,000 tonnes of Iranian billet were reported at around $500-505 per tonne fob to customers from the Gulf Co-operation Council (GCC) countries, Egypt, Southeast Asia and China.

Offers from Iranian mills came in at $495-505 per tonne fob on May 9.

The price of imported steel billet prices was largely unchanged in Egypt last week. CIS-origin billet was on offer in the Middle Eastern country at $533 per tonne cfr, but no deals were heard.

But Iran sold 40,000-50,000 tonnes of billet to Egypt at $525-530 per tonne cfr.

The trading situation may change, however, because Iran is one of Egypt’s sources for steel billet, and market participants in Egypt believe that Trump’s nuclear deal pullout could reduce the billet supply from Iran considerably.

Currently, the biggest billet supplier to Egypt is the CIS region, and sources believe that its share of the Egyptian market will probably increase.

Jessica Zong in Shanghai, Vlada Novokreshchenova in Dnepr, Serife Durmus in Bursa and Fiona Lam in Singapore contributed to this report.