Global billet market tightens due to Chinese duty hike

Friday, 04 January 2008 16:21:02 (GMT+3)   |  
       

The CIS mills have not been so active in the billet market due to the New Year-Orthodox Christmas period. According to the general expectation, they will return to the market with price levels of above $600/mt.

The Turkish mills are offering billets for export in a price range of $640-650/mt FOB Turkish port for March shipments. It heard that some sales were concluded close to the price level of $635/mt FOB last week. However, the Turkish producers are demanding $640/mt and above in the Turkish domestic rebar market.
 
Due to the export duty applied by the Chinese government (including an increase from 15 to 25 percent for export tariff on billets) effective as of January 1, Chinese mills seem to be out of the global billet market. Billet demand, especially from the Far East, has increased considerably. There is also a similar strong billet demand coming from the Middle East. It seems that this situation will provide support for the CIS and the Turkish mills in their efforts to increase their prices. However, the increasing billet demand and rising prices are also causing some alternative players to enter the market. It is heard that before Christmas a cargo from Brazil, including some prime quality billet, was sold to the Far East at the level of $660/mt CFR. The latest offers given from Brazil to the Far East are at the price level of $680/mt CFR.

With China's disappearance from the market, some alternative players, such as Brazil, have started to appear. However, it seems highly unlikely that Brazil will replace China in the billet market. It is expected, in the new market conditions, that the Persian Gulf and Far East markets will be shared between the CIS, Turkey and Brazil.


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