Demand in the local Turkish billet market has improved slightly during the past week with buyers' expectations of a further increase in billet prices strengthening amid the continuing upward movement of import scrap prices since the beginning of February and the increasing production costs of Turkish steel producers, with both these factors persuading Turkish finished steel producers to accept the rises recorded in billet quotations. In this context, Turkish billet producers have increased their domestic prices by $15/mt week on week to $385-395/mt ex-works. Domestic billet prices in Turkey are expected to rise further in the short term amid the ongoing upward movement of import scrap quotations.
Import billet prices have for a long time now failed to provide a price advantage for Turkish steel producers. Although billet prices have increased in line with higher import scrap quotations, they are still not at advantageous levels, and so Turkish steel producers prefer to use scrap in their production and have concluded many scrap deals.
Although demand for Turkish semi-finished and finished steel in the Far East has accelerated since buyers in the region consider Chinese export prices to be on the high side, Turkish steel mills are finding it difficult to conclude sales to their traditional finished steel target markets such as the US, the United Arab Emirates (UAE) and Egypt. Additionally, import billet prices are not attractive to Turkish mills and they are abstaining from purchasing billet within the scope of Turkey's inward processing regime (under this scheme mills have to give a commitment to export the finished products they produce from imported billet). As a result, demand for import billet in Turkey has remained at low levels during the past week.
While demand for domestically produced billet has increased in the same period, Turkish steel producer Kardemir has closed its billet sales today, February 15, after selling about 118,500 mt of billet in total. Turkish finished steel producers' demand for domestic billet has increased amid the stress caused by the ongoing upward movement of import scrap prices and also due to the lack of any price advantage provided by import billet.
Ex-CIS billet offers, which were at $385-395/mt CFR last week, have increased to $395-415/mt CFR amid the rises recorded in scrap prices and also due to the gradual increases seen in Chinese billet quotations since February 8. Meanwhile, some CIS-based billet suppliers have preferred not to give offers to the export markets in the current week and have maintained a wait and see stance. Under these circumstances, Turkish billet buyers consider ex-CIS billet offers to be on the high side and are focusing on their domestic market instead for their billet purchases.
Lastly, Chinese billet export offers have increased by $40/mt week on week to $440-450/mt FOB with the support of the sharp rises seen in iron ore quotations in China. Turkish steelmakers consider Chinese billet to be unattractive in terms of price levels and delivery times - similar to buyers in China's other target markets - and so demand for Chinese billet in the export markets is in general still weak.