CIS origin billets were being offered for export at around $490-500/mt FOB Black Sea for November shipments in the past week. Despite the conclusion of deals at positive levels to the Far East, the billet prices softened slightly due to the weakness in the Mediterranean and the Middle East longs markets. Recently, the higher-priced ex-Black Sea deals from Ukrainian producers were mostly concluded to the Far East. The Russian producers concluded mostly from the Caspian Sea to Iran and from the eastern ports to the Far East. However, a softening in the Russian domestic market is currently being reported. As a result of the incipient softening, an extra pressure on Black Sea offers may be seen.
Turning to the Turkish domestic billet market, a surprise effect of short duration was seen in the market after Karabuk Demir Celik lowered its billet prices to $492-495/mt excluding VAT and sold 30,000 mt of billet. However, the producers in Izmir and Istanbul did not decrease their prices and so the market perceived the rising trend as optional and has not been affected. Domestic billet prices in Izmir and Istanbul are currently at a level of $520/mt, excluding VAT. The price level in question causes difficulty for rebar producing rolling mills. However, in spite of this pressure, the producers have not decreased their prices due to the strong scrap price levels.
The latest billet export offers ex-Turkey are in a price range of $515-520/mt FOB. Due to the weak price levels in the longs market, producers have been trying to put the emphasis on billet sales. Buyers from the Middle East have been hesitating over these price levels, while buyers from the Far East and Italy do not seem eager to buy at the above levels, but are hoping for lower price levels instead.
Billet prices for rebar production in the local Italian market are currently at around €380-385/mt ($536-543/mt) delivered to rolling mill in northern Italy, on 60-day open account basis, excluding VAT. The price level of merchant bars is around €10/mt higher than the above prices. Billet prices are at low levels in parallel with the long product situation in the Italian domestic market. Despite the high €/$ exchange rate, the domestic prices seem to be acting as a barrier against imports from the CIS and Turkey.
The billet market is under pressure on account of the sluggish situation in the longs market. Due to the high scrap prices and the strong markets in Iran and the Far East, the billet market is still in a stronger position compared to its longs counterpart. Demand is slowing down. The CIS producers and their Turkish counterparts are waiting to see what happens next, keeping a firm eye on each other to see who will make a move.