Prices for ex-Russia billet have been going down gradually over the past week, as the weaker outlook in the scrap segment together with still poor demand have been putting pressure on suppliers. Though some mills have left the market, not ready to cut offers again, already being near or under their cost levels, some Russian exporters have voiced lower offers and the market has been facing an increased number of speculations about cheaper sales to Turkey, SteelOrbis has learned from the market on July 21.
In the Turkish billet market, activity in terms of talks has been limited this week due to falling scrap prices, generally cautious sentiment in the rebar segment and the limited number of offers. While earlier Russian sellers were trying to reach $600-620/mt CFR, nowadays the actual level of offers is at $580-590/mt CFR for Russian billet, although for ex-Donbass origin billet $590-605/mt CFR levels were voiced earlier this week. Two sales have been discussed this week in the market - one at $562/mt CFR Marmara and another one at below $580/mt CFR Izmir. These prices correspond to about $530-540/mt on FOB basis, termed by some market sources as being “close to the cost level.” However, some market players report that at least the Marmara deal is relatively old and so is not relevant. Other sources believe that both these levels may be just a manipulation to put pressure on other billet sellers and scrap suppliers.
In North Africa, demand has been almost fully absent with the real offer price expectations being close to $600/mt CFR Egypt, $10/mt below the offer levels seen last week. This level corresponds to around $550/mt FOB and below. But “there is no demand and no serious offers in Egypt. There are big quantities at the port which is very normal due to very weak payments… The foreign currency problem is dominating,” a trader said, adding that an offer from one trader has been at $620/mt CFR. Some sources believe that the tradable level for Egypt or Tunisia would hardly be above $560-570/mt CFR with the current weak demand conditions.
In most other sales destinations, Russian billet suppliers have been absent. In particular, as the tradable price for ex-ASEAN billet has come to $500-505/mt FOB, the competition for Far East Russia-based mills in Asia has been tough. “Traders invite bids for ex-CIS billets at $530/mt CFR [Southeast Asia], which is too high, if you don’t know the mill and plus sanctions,” an Asian source said. The freight from Far East Russian ports to Southeast Asia is $30/mt and above.
“I believe the market will go down because of scrap, but will not collapse. A decrease of around $10-15/mt is possible,” a trader said.
In Latin America, Russian billet suppliers have been absent for a long time due to the Western sanctions on Russia due to its large-scale invasion of Ukraine and very high freight costs. As a result, customers in this market have been dealing with alternative suppliers. In particular, a deal for 20,000 mt of billet from Russia’s Far East region was done at $640/mt CFR to Latin America last week. Sources said that El Salvador was in the market. The freight from Asia to Latin America is high too, at around $120/mt or higher, but from the Black Sea it is even higher.
The SteelOrbis reference price for ex-Russia billet has slipped to $540-550/mt FOB Black Sea, down by $5/mt from yesterday and down $15/mt since late last week. Lower deal prices reported to Turkey have not been included in the range since they have not been finally confirmed and, moreover, have been denied as fresh deals by sources.