International billet market – Trading firms conclude profit sales

Friday, 25 January 2008 16:28:09 (GMT+3)   |  
       

With some bookings at the price level of $640-645/mt FOB, CIS billet producers have been making offers this week mostly at the price level of $660/mt FOB Black Sea. It has even been possible to see the price level of $670/mt FOB. In spite of the supply tightening, the Middle East and the European markets are not eager to accept the price levels in question. On the other hand, the fact that the trading firms which had taken position ahead of the rapid overall increase in global billet prices have been making offers and sales at levels $20-30/mt below the mills' prices has been exerting pressure on the CIS producers. The CIS billet price offer levels to Iran's Caspian Sea region were at $725-730/mt CFR Anzali port at the beginning of the week. It has also been heard that there were some concluded deals at the price level in question. Although higher offer levels were heard later during the current week, the rebar price situation was not at a level to allow the acceptance of these new billet offers.

Producers were pushing for $700/mt in the Marmara and Izmir regions in the local Turkish billet market in the beginning of the current week. In the middle of the week, Kardemir increased its billet price to $675/mt ex-works, excluding VAT. However, no great demand level was observed due to the USD/TRY exchange rate fluctuation. On the other hand, on the morning of January 25 Isdemir announced that the opening of billet sales at the price level of $690/mt ex-works, excluding VAT. Many rolling mills in the Islenderun region are not able to carry out normal production due to the lack of billet. It is heard that some buyers from Iran have been in negotiations to purchase billet from Isdemir. If the sale to Iran in question happens, the billet supply in Iskenderun may tighten further in the near future.

It would be difficult to say that there is much demand for ex-CIS offers in the Turkish billet import market. However, some bookings with small tonnages were heard at the trading firms' previous price level of $660-670 CFR.

Turning to the Turkish billet export market, Turkish producers are pushing for $690-700/mt FOB. It was heard last week that there was a concluded sale to the Middle East at the price level of $680/mt FOB. This week also, it has been heard that a sale was concluded to Kuwait at the price level of $695/mt FOB.

The Far East Asian and Southeastern Asia markets have continued their strong trend. It is heard that there are some purchases from the CIS in the regions in question at the price level of above $730/mt CFR. It is also heard that the Indian producers, which had made sales at $640/mt FOB couple of weeks ago, are offering at $30-40t/mt above their previous level. In the same way, it is expected that there will be offers at the price level of $700/mt FOB from Malaysia.

The international billet market still continues its overall strong trend. There are a lot of rolling mills which are not able to produce at normal rates, especially in the Middle East and Turkey, due to the tightening of billet supplies. In spite of this, rolling mills are not so active in billet purchases due to the uncomfortable feeling resulting from the recent slowdown in the Middle East long products market. However, this market may gain momentum again if the recent positive trend in the European and US long products market gathers pace. This positive influence may also allow overall billet prices to maintain their strength without weakening.


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