Billet prices push market limits

While CIS origin billets were being offered for export in a range of $350-360/ton FOB in the week starting March 20, 2006, sales at $350-360/ton were heard to be concluded through the end of that week. In our analysis dated March 24, 2006, we mentioned that the widening of the price gap between CIS origin billets and Turkish origin billets would create an advantageous position for CIS origin billets in exports. Actually, through the end of the week, export bookings from the CIS countries concluded at $360-370/ton FOB were heard. Following these bookings, offers increased to a level of $360-370/ton FOB on March 27, 2006. The fact that Turkish local and export billet prices increased by around $30/ton caused CIS billet prices to gain some kind of activity, reaching $380-385/ton FOB as of the mid-week. Turkish local billet prices were in a range of $395-405/ton FOB levels early this week. However, after Isdemir increased its local billet prices to $424/ton ex-works on Tuesday, both local and export markets were upside down. After Tuesday, billets at levels below $420/ton were no more available in the market. Asking prices for export billets were at $420-430/ton FOB levels. Since there weren't such increases in the markets where Turkey could export billet, buyers did not show any interest to these offers. Turkish billets have not been active in the European, the North African and the Middle Eastern markets for two weeks. On the other hand, CIS billets were more active in the market, since the price gap between CIS billets and Turkish billets widened. They almost sold all their May shipments at $350-360/ton FOB. With the comfort to have concluded sales at certain amount, and in line with the increase in Turkish billet prices, CIS billet producers increased their prices as well. Turkish and CIS billet producers continuously increase their prices for the North African, the European and the Middle Eastern markets, where they are competing against each other. However, long product and billet markets in these regions are not in a condition to accept these increases. The dominant prices in these regions are still the previous price levels. While only in the UAE, long product prices indicate an increase of around $30/ton, the effective price increase does not seem to accept the price increases of CIS and Turkish origin billets, since the prices in the UAE have long been lower than that of other regions.