Despite the relative stability of iron ore prices in China and globally, the downturn of the scrap market is impacting billet prices both in the CIS and in Asia. While in the CIS prices have dropped to the lowest level since June 2017, in South East Asia they are holding slightly firmer, despite continuing to slide somewhat.

Chinese domestic billet prices have risen since the beginning of December, but this is unlikely to support the global billet market as long as scrap values remain under pressure in Turkey.

CIS

CIS billet producers have lowered their offers to $390-405/tonne fob during recent days, depending on the mill and tonnage. However, traders looking for billet to cover pre-sales are the only buyers in the market.

A large, 40,000-tonne lot sold by a Russian producer to Algeria in the last days of December at $395/t fob, albeit not confirmed by the parties, is considered to be indicative of the current price level. Another sale, of a 20,000-25,000t lot possibly to Turkey at $400/t fob in the beginning of January, is considered as too high a price for today. This is taking into account Turkish billet offers at $420/t fob, and their willingness to accept $410/t fob, according to some traders.

Meanwhile, a Russian scrap-based and somewhat troubled mill is offering billet at $390/t fob, but is not getting any orders.

Traders say Russian mills could reduce prices more to force sales, as the rouble's depreciation against the US dollar will allow mills some room to reduce prices. However, they are likely to want to re-roll as much billet as possible into rebar for the domestic market, where there are some signs of an uptick in rebar demand and margins are higher.