The mood among CIS-based billet exporters has become even more bearish as the tradable levels in the major destinations like Turkey or an alternative big market such as China have been going down rapidly. As a result, sales of ex-CIS billet have been done by the major mills mainly to such distant market like Latin America, while smaller mills and traders have had to cut prices down closer to $600/mt FOB to attract the attention of the more traditional buyers.
One Ukrainian mill sold 20,000 mt of billet at $630-640/mt FOB depending on the grade to Latin America late last week, SteelOrbis has learned. In addition, another Ukrainian producer traded a lot to the same destination at $640/mt FOB, but including some extras, according to market sources, so the base price could be at $630-635/mt FOB.
CIS-based producers, which were offering $645-650/mt FOB last week, have decreased their offers to $640/mt FOB at the moment, but this level is no longer attractive in most sales destinations. Securing some sales in Latin America has been a good option in the current market conditions, when bids from other traditional markets like Turkey and North Africa have fallen sharply.
For instance, one trader has sold a small lot of 5,000 mt of ex-CIS billet at $650/mt CFR to Tunisia. If excluding freight, this price should be $610/mt FOB at the highest, sources have said. And “this is more, as the market stands, than big mills’ targets,” one trader said.
In Turkey, after the latest scrap prices fell and local billet prices came to $640/mt ex-works, bids for imports have been at lower and lower levels. One lot of ex-east Ukraine billet was sold to Turkey at $638/mt CFR earlier, while as of today, August 17, reports have emerged about negotiations at even lower levels - at $630/mt CFR or even below. These prices are not workable for most large mills from the CIS, but the current situation in Turkey has been putting pressure on sentiments. For now, market sources believe that in the coming month it is possible that prices for ex-CIS billet will fall below $600/mt FOB Black Sea “because the Ukrainians can go down and the Russians will have to follow despite taxes,” a trader said.
The bearish sentiment in China is also adding to the weak situation in the CIS. The highest possible tradable level is $680/mt CFR China at the moment, which is fully out of the range of interest of most big mills from the Black Sea as, with the freight at $80-90/mt, this is $590-600/mt on FOB basis.
The SteelOrbis reference price for ex-CIS billet has fallen from $640/mt FOB on average late last week to $610-635/mt FOB with the midpoint at $622.5/mt FOB.