GLOBAL BILLET WRAP: Weak demand sends prices down in most regions

Prices for steel billet in the major markets showed mixed dynamics during the working week to Friday September 21. Weak demand drove prices down in the Chinese export, Southeast Asian import and Turkish domestic and export markets.

However, tightening supply in the Commonwealth of Independent States region pushed prices up in the CIS export and Turkish import markets.

Prices for billet in the Chinese domestic market were at 3,990 yuan ($582) per tonne on September 21, down by 30 yuan week on week.

The inventory for the product in Tangshan was at 290,000 tonnes on Friday, down 10,000 tonnes from a week earlier, according to a billet trader in Tangshan.

The softer prices of downstream products such as rebar limited the demand from re-rolling mills, pushing down billet prices.

Meanwhile, no export offers were heard last week out of China, but market sources calculated export offers to be around $530 per tonne fob based on the domestic price.

CIS, Turkey
Demand for CIS billet exports is only strong in Southeast Asia at the moment, according to sources.

A deal for a lot of about 50,000 tonnes of October-November production Ukrainian billet was reported at $480 per tonne fob Black Sea to Southeast Asia. Taking into account the freight rate of about $45 per tonne, the price was equivalent to $525 per tonne cfr Southeast Asia.

CIS-origin billet was reportedly being offered at $485 per tonne fob Black Sea.

Demand for billet in Turkey and the Middle East-North Africa region remains limited, according to market sources.

“Buyers in Turkey and the Middle East are not ready to pay mills the price they want for billet, so no deals [have been done],” a trader said. “Southeast Asia is the only active outlet market at the moment. The mills will be able to hold the current level for about a week; afterward, they will have to decrease prices to sell to other destinations.”

Meanwhile, Turkish domestic and export billet prices dropped due to softening demand, while import prices inched up, reflecting higher offers from the CIS region.

The reason for the increase in import prices was a rise in CIS export billet prices early last week after available volumes of material became scarcer.

This was partly driven by reduced production at some mills due to maintenance work and partly by the renewal of sales activity in the first half of September – to the Asian market in particular.

But demand in Turkey remains capped because the country’s steelmakers have preferred to book scrap instead.

For now, domestic and export billet prices have fallen due to the poor demand in those markets.

Middle East and North Africa
Steel billet import prices in Egypt were unchanged last week, with the import market remaining silent.

CIS-origin billet was offered at $495-500 per tonne cfr, but no major deal was heard.

Meanwhile, billet from Oman was on offer at $520 per tonne cfr for the United Arab Emirates, but no major deals were confirmed.

“There will be no billet bookings in the UAE for about one month [because] most mills [are fully] booked until late October,” one market participant said.

Southeast Asia
Import prices for steel billet in Southeast Asia softened slightly last week, with the mismatch between bids and offers keeping trading activity limited.

Re-rollers were still insisting on their low bids due to weak downstream sales, while sellers maintained their offer levels.

Offers were abundant, although trade remained at a standstill.

“Billet availability seems to be more than enough, but sellers and buyers [could not] match their prices to conclude deals,” an Indonesia-based trader said.

Offers from the CIS were heard at $525-535 per tonne cfr Indonesia and around $530-540 per tonne cfr Thailand.

In the Philippines, Russian billet was available at $530-535 per tonne cfr Manila.

Australian billet was offered at $535-540 per tonne cfr Manila, although no booking was heard. “It’s very surprising to see an offer to Southeast Asia from Australia,” a Philippines-based trader said. Traders could not confirm the reason for the sudden availability of billet from the country.

Thailand-origin materials were also available at $535 per tonne cfr Manila, while Middle Eastern billet was said to be offered to Thailand within $530-540 per tonne cfr Thailand.

Asking prices for Turkish billet stood at around $530-535 per tonne cfr Manila, heard in the Philippines and Indonesia.

Participants said the Turkish materials were most likely position cargoes because steel mills in Turkey have been raising their billet offers. Last Thursday, offers from Turkish producers had reached $490-500 per tonne fob – equivalent to about $540-550 per tonne cfr Manila.

Offers for Vietnamese billet produced from induction furnaces (IF) were at $527-532 per tonne cfr Manila, while Indian IF billet was available at $533 per tonne cfr. Prices for IF material are not considered in Metal Bulletin’s assessment, as per published methodology.

Iran-origin cargoes were offered at $510 per tonne cfr Indonesia and $525 per tonne cfr Thailand. Prices from Iran are also excluded from the assessment because they are lower than mainstream levels.

Few bids were heard this week.

Filipino importers generally indicated their interest at $520-525 per tonne cfr, although one buyer was willing to pay $530 per tonne cfr. Indonesian buyers were targeting $520 per tonne cfr.

Some re-rollers held a bearish outlook on billet prices, given the downward pressure from the sustained weakness in demand.

Yet sellers are unlikely to reduce offers significantly, a Southeast Asia-based trader said. “There is limited downside [for billet offers] because ferrous scrap prices cannot go down much lower,” he said.

Fiona Lam in Singapore, Vlada Novokreshchenova in Dnepr, Jessica Zong in Shanghai, Felipe Peroni in São Paulo, Serife Durmus in Bursa and Suresh Nair in Mumbai contributed to this report.