Prices for ex-Russia and ex-Donbass billets have posted a steep fall this week and the week ended with deals reported at close to $450/mt FOB Black Sea already versus $480-485/mt FOB late last week. The major reason for such a sharp drop has been the situation in Turkey, where even scrap prices have posted only gradual declines this week, buyers have been insisting on lower levels for imported billet, so the average price of the old deals for July shipment and new low bookings for August shipment would be more reasonable and at least in line with the levels in the local market.
According to market sources, there have been a few small tonnage sales for August shipment done at $480/mt CFR to Turkey, which translates to $450-453/mt FOB Rostov. While just on Thursday evening, the tradable level for larger Russian port Novorossiysk was assessed by a number of market sources at $490/mt CFR with the FOB level translating to $465-470/mt FOB. “At the moment, the CIS offers are at $490/mt CFR, so it [deals at $480/mt CFR] may be correct for the market,” a Turkish mill said. As SteelOrbis reported just yesterday, last deals for limited volumes were rumored at $493-495/mt CFR this week and a few transactions were widely discussed at $503-505/mt CFR last week.
“This [last deals at $480/mt CFR] is not the market level, but the compensation to buyers, who had to take old much more expensive billet. These deals could be non-profitable for some sellers, but if Turks will not take that old expensive billets, loses for exporters would be much bigger,” a trader commented.
It is worth mentioning that most ex-Russia billet sales to Turkey are in Turkish lira due to the sanctions on Russia by the Western countries after its large-scale military invasion of Ukraine. According to rumors, the large mill Metalloinvest, who was absent in the market after the announcement of the sanction by the US and the UK on April 12, has started to come back to the Turkish market. However, even though there have been speculations that at least three cargoes have been traded last and this week from this mill, they could not be confirmed by the time of publication.
The SteelOrbis reference price for ex-Russia billet has been settled at $450-470/mt FOB Black Sea with the midpoint at $460/mt FOB Black Sea, down by $9/mt on average over a day and $22.5/mt over the week. The price reflects the latest deals, offers and tradable levels, specifically to Turkey, since the activity in other markets, like Africa, has been very limited lately.