TOUGH CONDITIONS IN ALL STEEL BILLET MARKETS

Russian and Ukrainian steelworks have been operating in tough trading conditions in traditional export markets. In early billet deals, negative sentiment undermined what little price support existed. Buyers ignored official selling figures and tested their suppliers resolve with lower counter bids. The resulting lull in demand exerted downward pressure on transaction values. CIS suppliers are now concentrating on selling November’s output. This material started to be traded in the second half of October.

Domestic offers in Turkey have fallen. The prime reason for this is that demand for finished steel products is in a lull. Several local integrated steelworks and mini-mills have been reluctant to conclude deals. For instance, Kardemir only recommenced trading billet in mid-October. Exporters are finding it difficult to sell to their clients in the Middle East and North Africa. Negative price expectation has taken hold. The traditional price barometer of billet, which is the imported buying figure for HMS1&2 (80:20) from the US and Europe, suggests prices have not bottomed out.

Difficult trading conditions have persisted in the Gulf States. The instability in rebar and billet values, have forced local re-rollers to review their production schedule. Emirates Steel Industries is planning to export a higher proportion of its output in 2011. Most are closely following the price developments in the ferrous scrap market, even though these mills tend to use a small quantity of home generated scrap.

China’s billet market has lost some price momentum since the end of the national holiday. Effective prices have fallen from late-September levels due to lacklustre purchasing activity. Provincial governments have been under pressure to meet energy conservation targets. Production at outdated steel facilities has been suspended. Chinese steelmakers are now faced with the decision of either decommissioning these plants or upgrading them. Lacklustre demand from re-rollers is now starting to affect billet quotes.

South East Asian billet prices have been under pressure in October. Negative price expectations have taken hold in this region. New deals are in short supply. South East Asian buyers have been unwilling to purchase material in a falling market. The opening bids by foreign suppliers were too bullish. The offers were supported by market and economic fundamentals. Many felt that the prices did not reflect the weakness in imported scrap offers. Producers have subsequently downgraded their billet bids.

Source: MEPS - Semi-Finished Steel & Ferrous Scrap Review - Click here for a free sample copy

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