Official offers for billet from the major CIS-based steel mills have not changed much since last week, but the workable level has slipped, considering low demand from the main buyers, including Asia. Also, higher freight rates for shipments in August have impacted exporters’ competitiveness.
Offers from major CIS-based mills are still not below $380/mt FOB for August production billet recently. A contract from EAF-based producers from Ukraine for 10,000 mt has been heard signed at $370/mt FOB Azov Sea late last week, sources have said. Though usually the material from such smaller producers is priced at up to $5/mt below billet from large exporters, for now “scrap is weakening, therefore to get $375/mt FOB is almost impossible,” a trader said.
The tradable level is assessed by most sources at $365-370/mt FOB at the moment.
Some customers from the GCC have returned to the market, planning to buy traditionally big volumes for August shipment. Earlier in June, bids from Saudi Arabia were at close to $380/mt CFR and no deals have been reported. At the moment, the tradable value may be around $395/mt CFR or a bit higher, according to some sources, which is equivalent to $365/mt FOB.
Demand for billet has been weak in North Africa recently with no new enquiries reported so far. Offers to Turkey have been at $380-385/mt CFR, but the deal price level has to be at below $380/mt CFR, which translates to lower than $370/mt FOB.
Asia, which has been the main buyer of ex-CIS billet over the past month, has showed lower interest in buying recently, but at the same time it has lost its attractiveness for CIS sellers due to higher freight rates for August shipment. Some bids from China have been heard at $400/mt CFR this week and some traders said that it will be possible to sell at $405/mt CFR in the near future. But, according to sources, freight from the Black Sea region to China has increased from $30/mt or slightly below to $40/mt for August. As a result, even $405/mt CFR China can translate to only $365/mt FOB. “This is terribly impacting the economy of sales. That is why the target is for neighbouring markets now,” a producer said.
SteelOrbis daily reference prices for ex-CIS billet have declined to $365-370/mt FOB, down by $3.5/mt on average.
