Black Sea billet on guard against Chinese pressure

Friday, 13 April 2007 15:41:33 (GMT+3)   |  
       

Ukrainian mills have made a small correction to their prices this week in order to counteract Chinese offers, a situation SteelOrbis referred to in last week's price reports. CIS billet export offers are at a low $530/mt FOB Black Sea this week. On the other hand, it is possible to find offers at $540/mt FOB Black Sea. Currently, the attractive markets for CIS producers seem to be North Africa (except Egypt) and the Middle East, with Italy also excluded. The sharp decline in Turkish domestic rebar prices is causing rolling mills to withdraw from the market.

Billet prices in the local Turkish market are at $550-560/mt ex-works, excluding VAT. Due to the current domestic price levels, rolling mills in Turkey's Marmara and Izmir regions again do not seem to be making huge purchases. Rolling mills in Turkey's Iskenderun region have already purchased billets from Turkish mill Isdemir for delivery in June. They are not interested in making purchases again. In previous weeks, it was not easy to find offers for export. If the cancellation of the Chinese VAT rebate affects Turkish wire rod positively, the billet export supply may see a significant reduction. However, the decline in the prices of domestic long products may reduce the rolling mills' demand for billet. This situation may have a reverse impact on the billet export supply. The uncertainty will soon be clarified.  

The fact that the Chinese are now making offers to the Middle East and Mediterranean at $540-555/mt CFR, along with the entry of Indian billet to the Middle East (a sale was concluded to Jordan at slightly above $560/mt CFR in recent weeks), has inevitably led CIS producers, which were under pressure in the Persian Gulf for a long time, to make a small correction to their prices. However, it would be wrong to interpret this decrease as the beginning of a price fall. This is because in previous years most sales concluded from the CIS were prompt shipments, since there were huge stocks at the CIS ports. However, from mid-2006, sales began to be made from production. Current CIS offers are for the second half of May. Therefore, CIS producers in the billet market do not seem inclined to show signs of panic. However, if producers in the Mediterranean or competitors in the Far East decide to reduce their prices, the CIS producers will be able to adapt to the market.


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