Russian billet exporters have continued to cut prices actively, following the latest sharp drop in scrap quotations and as the number of customers has remained limited due to sanctions on Russian semis. Demand from North Africa has shown signs of a revival, though lower prices are sought by buyers, SteelOrbis has learned.
Over the past few weeks, Turkey has been almost the sole buyer of ex-Russia billet from the Black Sea, but this week new deals to Egypt have been done and more inquiries are expected in the near future. A contract for 10,000 mt of ex-Russia billet was done at $700-705/mt CFR with LC payment and for quick shipment, and the customer has also been looking for an additional volume. The FOB equivalent should be at $645-650/mt FOB or slightly below in this deal, which, however, is assessed as high in the current market conditions and could be connected with the quick shipment of the cargo.
Billet imports to Egypt may increase in the near future as Egyptian president Abdel Fattah Al-Sisi has ordered the exclusion of some raw materials used in industrial production from import procedures, meaning that the mandatory use of letters of credit as the only payment method will be cancelled for billet. As a result, if buyers in Egypt are able to use cash against documents, the same as before the new regulation which was imposed from March, purchases of billets from Russia may improve. “There is no longer a need to open LCs,” a trader commented.
Also, demand from other countries in North Africa can be seen. An inquiry for 20,000 mt of imported billet has been heard from Libya.
Negotiations for ex-Russia billets have continued in Turkey, but at much lower levels than last week, after the sharp drop seen in the scrap and finished steel segments. In particular, there is an interest in purchases of ex-Russia billet at $650-660/mt CFR from the Karabuk region, while last week most offers were at $720-740/mt CFR and one deal to Izmir was done at $685/mt CFR. The new prices translate to $600-610/mt FOB Black Sea.
The SteelOrbis reference price for ex-Russia billet from the Black Sea has been settled at $600-640/mt FOB, with the midpoint at $620/mt FOB, down by $10/mt from the previous day and $45/mt down from last week.