Offer volumes of ex-Russia and ex-Donbass billets have been reduced lately, which has provided some support to prices. However, in the major sales destinations - Turkey and Egypt - trading has slackened and there has been no support for higher prices, with sentiments mainly bearish.
The SteelOrbis reference price for ex-Black Sea billet has moved up by $5/mt up on the lower end to $475-490/mt FOB, with the midpoint at $482.5/mt FOB. This correction has been mainly due to the reduction of supply rather than acceptance of higher prices by buyers. Most offers from Russian mills have been standing at $480-500/mt FOB.
The lowest offer level to Turkey has been reported at around $505/mt CFR, translating to around $475/mt FOB Novorossiysk, but market sources have claimed that there was “only one unsold 10,000 mt lot offered at old prices.” Some market sources said that $480-485/mt FOB may be achievable for traders, but, since this is $510/mt CFR minimum for Turkey and no one is interested in such levels, real negotiations are almost absent. “With the latest lower scrap deals, I believe billet will move close to $470/mt FOB soon, the level before the export tax introduction,” a trader said.
There have been almost no firm export offers from Donbass-based mills, which have lowered production drastically, having problems with scrap purchases. “They have very big problems with securing scrap nowadays. All scrap purchases [in Donbass] will now go through only one legal entity. We don’t see any sizable [billet] production possible for November. That is why there are no offers,” a market source commented.
In Egypt, the tradable level for ex-Russia billet is still up to $540/mt CFR, which translates to $490/mt FOB or just slightly above, taking into account freight and additional expenses. At least three deals were done for sizable lots to Egypt last week at around $530-540/mt CFR and some addition prompt shipment bookings took place at higher levels. “In Egypt, I would say that the prices are stable from last week,” a trader said.