GLOBAL BILLET WRAP: Weak sentiment continues to pressure global prices

Most global steel billet prices fell in the week ended Friday January 26, amid low trading and weak market sentiment.

Chinese mills remained out of the export market, while demand for CIS-origin material was halted as buyers waited to see which direction the market would take.

On the raw materials’ side, ferrous scrap prices fell last week, due to declining demand for Turkish rebar and weak market expectations.

And Metal Bulletin’s daily index of spot market iron ore prices fell to $74.40 per tonne cfr Qingdao on Friday, from $76.75 per tonne cfr Qingdao a week earlier.

In China, billet prices reached 3,600 yuan ($569) per tonne on Friday, up by 40 yuan from the previous week.

Billet prices started the week by climbing to 3,610 yuan per tonne, an increase of 50 yuan from the previous week, due to active trading over the weekend.

Prices corrected to 3,580 yuan per tonne on Tuesday, then rose again to $3,600 yuan per tonne on Thursday.

But market participants showed concern that increasing levels of inventories could force prices down this week.

Inventories in China’s northern Tangshan region were reported at 600,000 tonnes on Friday, up sharply from 400,000 tonnes a week earlier, according to sources.

Chinese producers remained absent from the export market last week. Offers were expected to come at $520 per tonne fob, but there was no interest from buyers.

“China’s prices were less competitive than [those available from] alternative suppliers,” an Eastern China-based steel trader said.

Southeast Asia
Import prices of billet in Southeast Asia remained unchanged this week, at $530-545 per tonne cfr, because suppliers from most regions did not change their prices, and buyers were not interested in Chinese material.

Later in the week, Iranian billet was offered to clients in Thailand at $540 per tonne cfr, but no deal was made due to tough competition from other sources.

Indian material was heard to be negotiated in the country at $520 per tonne cfr, according to a trader.

CIS, Middle-East-North Africa
CIS billet prices started the week at lower levels of $511 per tonne fob Black Sea, amid weak trading activity and pressure from the Chinese market in the previous week.

Last week, offers of CIS-billet from traders were reported around $505-510 per tonne fob Black Sea, while steelmakers were offering at $510-515 per tonne fob Black Sea. On the buying side, no bids were made.

Market participants believed that a workable price level would be around $500 per tonne fob Black Sea.

Traders built large inventories at ports before the new year, because they believed prices would continue to increase, according to sources. But due to the change in sentiment, customers now prefer to wait for a clearer pricing trend before resuming purchases.

As a result, traders are sitting on large volumes of material, which makes it more difficult for mills to sell new batches.

In Egypt, billet import prices fell when a deal for low-priced Iranian material was closed.

About 10,000 tonnes of Iranian billet was booked at $520-525 per tonne cfr for February shipping, Metal Bulletin heard.

CIS-origin material was heard at $520-530 per tonne cfr, with bids reaching $510 per tonne cfr.

In Turkey, prices of imported material also dropped, due to pressure from lower-priced scrap.

Customers were willing to pay as much as $515 per tonne cfr for billet, but suppliers in the CIS region were offering no less than $525-530 per tonne cfr Turkey.

Metal Bulletin’s weekly price assessment for domestic billet in Turkey on Thursday was $535-540 per tonne ex-works, down from the $540-545 per tonne of last week.

“Billet prices have weakened in Turkey. The Iskenderun region was especially strongly affected by a Turkish military operation in northern Syria,” a source told Metal Bulletin last week.

Other regions
In Latin America, Peruvian steel producer Aceros Arequipa announced an investment of $180 million to build a new electric-arc furnace (EAF) at its Pisco works, with production capacity for 1.25 million tonnes per year of crude steel.

The facility is expected to start up in mid-2020, and the investment is intended to reduce the company’s dependence on imports of billet.

Metal Bulletin’s weekly assessment of Latin America’s billet export prices remained unchanged on Friday at $510-520 per tonne fob.

And Metal Bulletin is proposing to update the specifications for its India domestic billet and rebar assessments, to provide a clearer distinction between the primary and secondary markets.

The specifications for domestic billet will be updated to better reflect price assessments for secondary-grade IS 2831 billet, measuring 125x125mm.

Jessica Zong in Shanghai, Paul Lim in Singapore, Vlada Novokreshchenova in Dnepr, Fiona Lam in Singapore, Serife Durmus in Bursa, Cem Turken in Mugla, Lee Allen in London, Ana Paula Camargo in São Paulo and Suresh Nair in Mumbai contributed to this report.

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