The CIS billet market has stuck this week with almost all FOB prices being nominal as trade has been paused after the escalation of tensions between Russia and Ukraine when Russian president Putin recognized the two breakaway regions of Ukraine as independent on February 21.
As of now, the indicative price level for ex-CIS billet is at $680-690/mt FOB Black Sea, but no traders or firm negotiations have been heard this week and, not only because the allocation has been limited, but due to buyers’ worries over making commitments on Black Sea billet volumes. “We see demand [from Egypt and Europe], but there are no negotiations [with mills] as there are no billet volumes, and many players are in shock,” a Russian supplier said.
“It’s difficult to close any deal with Russia-Ukraine, because it could end up as a force majeure situation,” a trader said, adding, “The banks may not want to touch CIS origin material.”
At present, the main issue is among the financing institutions as banks have been more cautious in opening LCs or are taking their time, waiting for further developments, particularly in terms of sanctions.
As a result, most trading and negotiations for ex-CIS billet have been from traders, who have position cargoes. In particular, 10,000 mt of ex-CIS billet has been sold by a trader to Egypt at $725/mt CIF, which is $10/mt higher compared to the previous deal to this destination reported last week. Bids from some customers in Egypt were still at $705-710/mt CFR earlier this week as the market needs some time to adapt to the new payment system there. But market sources believe that this price is very hard to find nowadays, taking into account the very limited offer volume.
Some offers from traders have been heard even at $740/mt CFR Egypt, also from traders for April shipment, but for ex-Turkey billet. This increase has been supported mainly by increases seen in the rebar prices in Egypt, but recent concerns over the future billet sales from mills have also added to the situation.
Billet customers from Latin America have been very worried over the recent news coming from Russia and it is expected they will avoid purchases of ex-CIS billet for a month or so, sources believe.
At the same time freight rates have continued to go up, adding around $5/mt from the levels seen in early February - average freight to Turkey and Egypt has been assessed at $30/mt. Moreover, some sources believe that they will keep going up “due to oil prices and uncertainty in the Black Sea area,” a trader said.
The SteelOrbis reference price stays stable at $680-690/mt FOB for now.