The decline in CIS billet prices came to a halt last week. There were offers as low $475/mt FOB level. However, the decline tapered off due to the bookings concluded at $475-483/mt, especially to the Middle East, in the last ten days. Prices are now stable. It is almost impossible to find offers for prompt shipment from CIS producers. Ukrainian producers are giving offers for September shipment. In addition, offers for September shipment in Russia are expected to run out soon.
Although the billet offers are higher in the Turkish domestic market, the latest bookings have been at $515-520/mt ex-works, excluding VAT. The fact that the Turkish domestic longs market is surprisingly firm ahead of the national election is keeping billet demand brisk. This situation allows Turkish producers to be less aggressive in making billet offers for export. The latest billet export offers ex-Turkey are at around $500-505/mt FOB Turkish port. According to reports, bookings have been concluded at $500/mt FOB.
The market situation in Italy is somewhat different from the Middle East. Billet prices in the local Italian market are around €400/mt ($545/mt) delivered to rolling mill on open account basis, excluding VAT. This price level is higher than the current longs price level. Despite the increase in the Euro-US Dollar exchange rate, this situation causes weakness in the import billet market. The latest billet offers from the CIS were at $505-510/mt CFR. Although some offers have been heard lower than this price range, major CIS producers are not willing to offer below these prices. If the rolling mills see signs of hope in the Italian longs market, they may make import billet purchases for September with the help of the increase in the Euro-US Dollar exchange rate.
The decline that came to end in the Mediterranean and Black Sea billet markets concluded earlier than expected. The reasons for the end of the decline are as follows:
1- The Chinese billet export tax allowed CIS producers to enter the Far East after three years.
2- Chinese producers withdrew from the Middle East and Persian Gulf
3- Turkey's billet demand is firm due to the high domestic longs prices
4- An extra margin has been formed in current billet prices since the decline experienced in longs prices - especially in the Middle East and Persian Gulf - was lower than the fall experienced in billet prices.