The optimism has not faded from the CIS billet export market by the end of this week, though the market sources’ views on the further development of the market have been divided during the week. Some higher prices have been reached in deals for ex-CIS billet to Turkey, but FOB prices have been hit by much higher freight rates.
Late last week-early this week, 5,000 mt of ex-CIS billet was sold by a trader to a Turkish producer at $600/mt CFR, with most sources believing that the FOB price level should be below $580/mt FOB. Two lots of billet from eastern Ukraine have changed hands at $595/mt CFR.
A deal for 10,000 mt of ex-Russia billet has been done at $608/mt CFR with freight from a mill estimated at $18/mt it would translate to $590/mt FOB. “But since this is a mill’s direct sale, then even if the freight goes up they can absorb it, whereas a trader would not be able to,” a source said. “A trader would not be able to get freight to Turkey at less than $20-25/mt,” another trader said.
Customers at other sales destinations have been reluctant to accept higher prices for ex-CIS billet. Offers to Tunisia have been heard from a mill at $615/mt CFR, but traders would be offering at hardly below $625/mt CFR with current increased freight rates. “Freight is killing business,” a trader commented.
Most offers from the CIS have been at the wide range of $580-600/mt FOB. Some mills have been waiting for prices to touch $600/mt FOB as scrap prices are still following an uptrend and “most people are not selling as they expect the market to go up,” one trader said. But some sellers believe that it will be hard for prices to improve further as the rebar market has not been performing very well and many mills from Ukraine and Russia have visible unsold volumes for March. “Some are aiming for $600/mt FOB, but some mills think that we will peak at $585/mt FOB,” a Russian producer said.
The SteelOrbis reference price for ex-CIS billet has been at $575-590/mt FOB, increasing by $2.5/mt on average today and stable week on week, though the range has been widened by $5/mt.