The market conditions for ex-CIS billet exports have remained weak and negative signals from China have added pressure. Poor demand in the major markets like Turkey and higher freight rates have been the major reasons behind the recent reference-price decrease, even though major mills have still been holding offers at higher levels.
Ukrainian mills have been offering billet at $660-670/mt FOB this week, almost in line with late last week. And though bid prices from the major outlets have been much lower, producers have good order books and are not in a mood to cut prices much at the moment, SteelOrbis has learned. “We consider the market [price level] at not below $650/mt FOB,” one Russian supplier said, adding that there are no firm offers at the moment. “Russian suppliers closed August [production] sales and will wait,” a source commented.
Last week, at least two lots of ex-CIS billet were traded to Africa at $655-660/mt FOB and this week negotiations for one more lot to North Africa are also in place with the tradable level heard to be at $650-655/mt FOB maximum, SteelOrbis has learned from market sources.
In Turkey, some bids have been reported at $660-665/mt CFR, being out of the range of interest of major mills from the CIS. The freight from the Black Sea region to Izmir has increased to $30/mt minimum, up from $25-28/mt in July. At the end of last week, 3,000 mt of ex-Russia billet for August shipment was traded at $665/mt CFR Bartin. But most large mills, who are offering September and October shipment, will not agree to sell at levels below $680/mt CFR Turkey, translating to $650/mt FOB.
The slowdown of demand and the price fall in the Chinese billet market has added to the bearishness in the CIS. Bids from China have fallen to $660-680/mt CFR and the highest possible level has been assessed at $690/mt CFR, versus deals at $725-730/mt CFR last week. This coupled with the increased freight rates (from $70/mt to as much as $90/mt from Black Sea to China) mean that China is not a possible trade destination for exporters from Black Sea for now. “If China stops falling this week, prices in the CIS will not go down more,” a trader said. On Wednesday, August 4, rebar futures at Shanghai Futures Exchange in China have posted an increase by 2.5 percent after two days of declines, which brings some hope.
The SteelOrbis reference price for ex-CIS billet has been lowered by $5/mt on August 3 compared to late last week to $650/mt FOB Black Sea.
