CIS-origin 3SP-5SP billets are currently being offered for export at around $480-490/mt FOB Black Sea. Despite the fact that CIS sales have been concluded on a regular basis to the Far East for a month now, the weakness in the Middle East longs market and the decrease in the Mediterranean longs market prices (the former due to Ramadan) have caused the price levels of CIS export offers to fall off. Important billet exporters, such as Italy, Egypt and Turkey, are staying away from purchases at the moment. The exporting countries mentioned above are hoping to see some movement in the Middle East market after Ramadan.
In the Turkish domestic market, the price level of St 37 grade steel billets is $505-530/mt + VAT ex-works. Kardemir, which had surprisingly lowered billet prices in early October, increased its billet sales price to $505/mt + VAT ex-works this week. However, the billet market is registering a lack of activity due to the production slowdowns or ad-hoc production stops seen in most domestic rebar rolling mills.
The offers in the Turkish export market are at a price of $510-525/mt FOB Turkish port. The Turkish producers seem to be more active in the export market, especially as the domestic market has recently been slow. Also, as a result of the sluggishness and the reduced production quantities in the wire rod market, larger amounts of billets have been flowing to the market. Some sales were concluded to certain markets, including Southeast Asia, last week. Even sales by container have been taken place in recent weeks. The high scrap prices have left Turkish producers stranded. However, the CIS-origin billet prices, although they are in a downward movement, may put pressure on the Turkish producers.
The Mediterranean and the Black Sea were very strong until the end of the third quarter of 2007. Also, these markets were stronger than the longs markets in the same period. Besides, billet prices in the Far East and Southeast Asian markets, which have been increasing since late August, have created a strong demand for Black Sea and Mediterranean billets. However, the decreases seen in the European and the Middle East markets have resulted in tightened margins, production slowdowns and ad-hoc production stops at rolling mills in these regions. The situation has been putting downward pressure on the billet market despite the high raw material prices.