New supply of smaller Indonesian steel billet a gamechanger for Philippines, sources say

The first sale of 130mm blast furnace (BF)-based steel billet by a large Indonesian steelmaker was a significant moment for the Philippines import market because it will create more purchasing choice for buyers, sources said on the sidelines of Fastmarkets’ Singapore Steel Forum

The forum on Wednesday, May 18 was part of the Singapore International Ferrous Week.

The Indonesian BF-based mill had previously been producing billet only in 150mm size, in 3sp, 4sp and 5sp grades, largely in order to serve the burgeoning China import market. But it started to offer 130mm billet to the market for the first time in recent weeks, market participants said.

It will continue to have production lines dedicated to making 150mm billet, Fastmarkets understood.

While only one importer in the Philippines has traditionally been a reliable buyer of 150mm BF billet, most re-rolling mills in the country preferred to consume billet in sizes of 120-130mm.

But difficulties in opening letters of credit (LCs) with banks for Russia-origin cargoes, since Russia’s invasion of Ukraine in March, have meant that Vietnam has become one of the few major suppliers of smaller billet sizes to the Manila market.

Meanwhile, the Indonesian mill has found it difficult to sell its billet into the Asian markets over the past two months, sources said, amid very low domestic Chinese billet prices, and the presence of cheap Russian billet weighing down sentiment in Southeast Asia.

Fastmarkets’ price assessment for standard 5sp 120-150mm BF and electric-arc furnace (EAF) steel billet, import, cfr Manila, was $680 per tonne on May 19, narrowing downward by $10 per tonne from $680-690 per tonne cfr day on day and down by $20 per tonne week on week from $700 per tonne cfr.

Effect on the market

A deal for such 130mm Indonesian 5sp BF billet was heard closed at $690 per tonne cfr Philippines late last week. Offers of 130mm billet made by the mill were heard at $690 per tonne cfr Manila on Wednesday for 20,000-30,000 tonnes of 5sp, and at $678 per tonne cfr for 20,000-30,000 tonnes of 3sp, both for late-July shipment.

There was also a rumor on Wednesday that a deal for 4sp billet produced by the mill had closed at $670 per tonne cfr Manila this week, but this could not be confirmed at the time of publication.

Sources at Fastmarkets’ event on Wednesday agreed that the mill’s decision to produce 130mm billet would prove popular in the Philippines and would widen the range of buyers able to purchase the mill’s products.

But a second Singaporean trading source said that the move was a negative one for sentiment in the Asian billet market in general, because it would increase supply in the market and further depress billet prices in Asia. A South Asian trading source at the event said that the strategy would put pressure on Vietnamese producers to price their billet more competitively.

Billet offers weaken again

Offers for Japanese 5sp EAF billet were heard at $740-750 per tonne cfr Manila earlier in the week, with Chinese BF billet offered at $710 per tonne fob (equivalent to $745 per tonne cfr) on Tuesday.

Induction furnace 5sp billet from Southeast Asia was available at $690 per tonne cfr Manila over the weekend, according to a Philippines mill source, while price indications for such material had fallen to around $670 per tonne cfr by Thursday, a Filipino trader said.

A deal for 6,000 tonnes of Japanese 3sp steel billet was heard concluded late last week at $705 per tonne cfr Manila for June shipment, according to two Japanese trading sources.

Sources estimated that this price would be equivalent to around $710 per tonne cfr on a 5sp basis, taking into account current market factors.

The Japan deal was one of the first heard done into the Philippines following the country’s presidential election on May 9, which returned Ferdinand Marcos Jr as the victor. Philippines market participants predicted earlier this year that steel sales into infrastructure projects would pick up once the new president was in office.

Into this week, there was a rumor of a cargo of Vietnamese BF billet being sold at $650 per tonne fob, but there was no confirmation of the sale or the potential destination at the time of publication.

Prices for Russian material continued to undercut other origins in Asia, with a cargo of 5sp BF billet from the country’s Far East ports heard sold at around $640 per tonne cfr Indonesia over the past week.

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