Falling Chinese Billet Offers may Keep Global Scrap Prices under Pressure

Consistent fall in billet offers from Chinese exporters is certainly going to give a tough time to scrap traders across the globe.

Chinese billet getting popular in Turkey, which is the largest importer of ferrous scrap in the world, will put pressure on global scrap prices. Market participants highlight that big consignments of Chinese billet will be reaching Turkey ports by next month, which will slow down scrap imports from US and Europe, hence putting pressure on prices.

Sources confirmed Chinese billet offers are at USD 355-360/MT CFR Turkey, much cheaper than Russian/Ukrainian billet offers, which are not less that 370-375/MT CFR Turkey.

”It makes more sense for a steel maker in Turkey to import billet and roll it rather than importing scrap, melting it and then rolling it”, said one of the global traders based in Singapore.

What does fall in Chinese Billet offers mean for Indian market

India is a net exporter of billet, exporting around 700,000 MT billet every year largely to Bangladesh, Sri Lanka and African market. Chinese billet offers falling globally will indirectly impact Indian billet prices.

Global buyers are preferring Chinese billet due to low cost. For instance Bangaldesh, which is the largest market for Indian manufacturers is receiving Chinese offers at USD 360/MT CFR Bangaldesh main port, where as Indian billet was sold at around USD 405/MT CFR Bangladesh early this month.

Market participants mention that Indian manufacturers will not be able to match Chinese offers, forcing them to push their material in domestic market.

Global Billet Offers as on 22 Jun’15

Source: SteelMint Research