Imported billet prices have increased by $20-30/tonne on-week in the Middle East and North Africa market.

Iran’s sole blast furnace route steelmaker was quoting billet at the beginning of this week at $470/t fob Bandar Abbas for 150mm 3sp and concluded a deal at $474/t fob, for February shipment. South Kaveh Steel (SKS) raised its target price to $480/t fob for 150mm 3sp grade billet and, next week, Iranian mills are expected to raise their target prices to $490/t fob, Kallanish notes. 

Iran-origin billet importers in Oman and United Arab Emirates are concerned natural gas supply restrictions in Iran, announced to steelmakers a short time ago, may cause billet supply shortages, consequently elevating prices further. Buyers are also monitoring the Iranian currency depreciation against the dollar. Domestic consumption in Iran will be low in winter and further drastic increases are unlikely unless prices in Europe and Turkey increase.

Southeast Asian steelmakers already raised their 150mm 3sp grade billet target prices to $540-550/t fob, for February shipment, equating to $582-592/t cfr (free out) GCC ports. The rebar market is improving in UAE and Oman. The UAE benchmark mill is expected to announce its January-rolling rebar price on 22 December. Most sector participants expect an increase of at least $20-25/t (AED 73-92) on December quotes of $615/t (AED 2,260) ex-mills, with a premium of $20/t and $25/t for 18-40mm and 8mm diameter rebar, respectively.

In Saudi Arabia, rebar and billet markets are saturated and rebar remains sluggish. Moreover, buying interest is almost nil for local induction billet, which is available at SAR 2,000-2,080/t ($533-555) ex-works.

After Saudi Sulb secured an exemption from paying duty on billet imports from its parent company, Bahrain's Sulb, other rebar re-rollers, particularly Rajhi and Al Yamamah, are expected to examine alternative billet imports from Bahrain. This is due to freight cost advantage, short lead times and potentially zero import duty.

However, the customs system is yet to be tested by buyers other than Saudi Sulb. If the system works, Russian and Southeast Asian billet exports to Saudi Arabia will be challenged by billet supply from Bahrain, which is also preferred as it is direct reduced iron-based.

"The markets are still fragile and a slight increase is easy to digest. The current price hike is driven by the China factor but demand seems to be not increasing significantly, although construction sector intake is boosting in winter compared to summer in this part of the world,” comments a regional trader. "The rebar market is still sluggish in Saudi Arabia which is an important indication in our region for the billet market."