Turkish mills have revealed a high interest in billet purchases from Algeria, following the recent export tender held by Algerian Qatari Steel (AQS). The prices for billet offered by international traders have turned out to be quite workable in Turkey, and up to 80,000 mt have been booked this week, in addition to the previously closed deals for Asian origin billet. In addition, the allocation of billet from Russia and Donbass has been somewhat limited lately, partially since some sellers are focusing on alternative markets like Egypt. In addition, these origins are mainly sold to Turkey in small lots, while this time Turkey has required larger volumes.
According to sources, two Turkish mills have recently booked 20,000 mt and 50,000 mt of Algerian billet, respectively, at around $557-558/mt CFR. In addition, another 10,000 mt have been purchased by a large re-rolling company at $559/mt CFR or “close to $560/mt CFR.” Overall, AQS has traded at least 120,000 mt for export, although the tonnage may have been larger. Around 50,000 mt is reported to have been sold through a company subsidiary, while the rest of the volume has been distributed between international traders. Based on the Algerian billet sales to Turkey, market players assume AQS closed most of the deals at around $530/mt FOB. The freight for 20,000 mt vessels to Turkey is estimated at $18-22/mt. Most of the material is for shipment in the first half of March, but some deals to Turkey have included billet for end-of-February shipment from traders’ previous positions. Along with Turkey, sources expect Algerian billet to be offered to Europe and Egypt.
As SteelOrbis reported earlier, some interest was also seen in Asian billet. A 30,000 mt lot from Malaysia was booked last week at close to $565/mt CFR. The most recent billet offers from Indonesia have been received at $559-562/mt CFR Turkey for early March shipments, in line with last week, although the mill’s official offers at $540-545/mt FOB imply higher delivered price levels. The freight for 40,000-50,000 mt is close to $30/mt, while for 30,000 mt it is around $35-37/mt, traders say. “It seems they are trying to go short, thinking the producer will not achieve an increase and will offer according the previous sales prices from Indonesia,” one source assumed.
In addition, according to market information, the mill that booked 50,000 mt of Algerian billet this week, closed a 50,000 mt deal for Indonesian billet last week at $560/mt CFR or slightly above. “They [the buyer] have certainly restocked a lot, most probably because they switched crude steel to slab production since there is no cheap slab option around currently. And when choosing which semis to produce, flats definitely brings you a good margin, while rebar does not,” a trader commented. According to evaluations, Turkey’s own billet production cost stands at around $570/mt ($150/mt from scrap to billet), while production cost for slab is at around $580-585/mt ($160-165/mt from scrap to slab). As a result, the $555-565/mt CFR import bookings from Asia and Algeria, closed since last week, are quite reasonable. In the slab segment, most import offers are coming at $610-640/mt CFR for various origins, which is far higher than what a Turkish mill produces itself.
As a result, some further bookings may also be heard in the market shortly, for the remaining ex-Algeria lots, from Asia or from Saudi Arabia which was offering at $560/mt CFR. Ukraine is currently focused on alternative destinations, while offers from Russia and Donbass are not numerous in Turkey. Some indications have been coming at $550/mt CFR for small lots and near shipment dates, while one mill has been targeting $555-560/mt CFR. No deals for either Russian or Donbass origins have been reported recently.