Though most of major Russian billet suppliers have been trying to keep prices stable this week, waiting for a clearer scrap trend, sentiments have remained bearish in general, leading to a slight decline in billet prices.
The SteelOrbis reference price for ex-Russia billet has settled at $560/mt FOB Black Sea by the end of the week, narrowing from $560-570/mt FOB seen from late last week. This price level reflects the tradable level, which is averaging between the latest offers and bids. Most major Russian sellers have voiced offers to Turkey at $590-600/mt CFR this week, with only small discounts possible on this level. However, most Turkish customers continued to have a bearish look on the market, bidding at below $580/mt CFR. “There could be low bids like $570/mt CFR, but I don’t think that any seller could confirm this price. Offers are $590/mt CFR minimum,” a Russian seller said. “Turkish mills are very slow now. You see that scrap is unstable, so no one is active,” a trader said.
Taking into account the latest deep sea scrap deal at near $430/mt CFR, captive billet production costs in Turkey would be at $600-605/mt maximum, while for large mills they would definitely be lower, which explains the declining bids of Turkish customers for import billet. “I still think that scrap has space to go down by $10/mt or more, after which the steel market will move more actively,” a European trader said.
Turkey has continued to be the major outlet for Russian billet sellers, since demand in other traditional sales destinations has been either close to zero or has been covered by other suppliers. In particular, in Egypt, taking into account the continuous payment problems, no new firm negotiations have been reported, with the tradable level assessed at “below $600/mt CFR.”
In Latin America, ex-ASEAN billets have been preferred over ex-Russia. For instance, 15,000 mt of ex-Indonesia billets were traded to Latin America at $560/mt FOB last week, which should translate to $610-615/mt on CFR basis, given that the billets will be shipped together with wire rods.
In the Far East, the latest deal for ex-Russia billet was done to Taiwan at $565/mt CFR, as SteelOrbis reported earlier, but since more traders have started to offer in short position at $560/mt CFR, bids for ex-Russia billet would also go down below this level.