Prices for billets from Russian suppliers have dropped further even though they were already in line with or below the costs of some producers. Very slack demand and falling bids from Turkey and North Africa, which are the major buyers of ex-Russia billets, have exerted strong pressure, SteelOrbis has learned from the market on July 29.
Import billet price levels in Turkey have moved down further by the end of the week. On one side, the buyers have been cautious in their negotiations since it has been clear that the market is going down, while a lot of suspicious offers have been heard at various levels. Some sellers have been offering at $550-560/mt CFR, versus mainly $575-590/mt CFR last Friday and up to $600/mt CFR for “cleaner” ex-Russia billet and for immediate shipments. In the meantime, some trading companies were offering $540/mt CFR this week for Donbass and Russian origin. The lowest price level heard in the market was $530/mt this week for a 5,000 mt cargo which had already arrived at a port in the Izmir region but was not delivered to the customer due to internal payment issues. However, some sources reported the cargo had already been seized. In addition, there has been talk this week about a large Russian mill having sold large billet lots at $550-560/mt CFR, but, once again, the trusted market sources say the deals are old and are being used as a manipulation. One source said, “As for now, the market in Turkey is silent. The workable level is definitely below $550/mt CFR,” which translates to around $510/mt FOB Black Sea on average.
Another factor putting pressure on the billet market in Turkey is the significant drop in the local deal prices for rebar. As SteelOrbis reported, an Izmir-based mill sold 35,000-40,000 mt of rebar at $585-590/mt ex-works locally, while other Turkish producers maintained their offers at $620-630/mt ex-works and above. Those sales have created confusion in the billet market and affected the workable levels for both import and domestic billet. According to sellers, the price for import billet should be below $550/mt CFR in order to conclude deals. In the local market, the situation is even more stressful. Early this week, Kardemir traded 4,000 mt of billet to merchant bar mills at $630-635/mt ex-works, but much weaker rebar prices makes buyers believe that new billet offers have to be at $570/mt ex-works and below.
In other outlets, Russia billet suppliers have also faced difficulties. The lowest offer level from Russian sellers has been reported to Egypt at $570/mt CFR or $510-520/mt FOB Black Sea, but $580-590/mt CFR have also been heard as asking prices, which are again lower than $600/mt CFR in offers heard last week. “In Egypt, there is a huge shortage of US dollars. The ports are full of cargos that have not been paid for. So, I doubt someone will do new business,” a trader said. The tradable level for Egypt would hardly even be $560/mt CFR, according to sources.
The SteelOrbis’ ex-Russia billet reference price, based on competitive offers and the tradable levels for the material available from Russian suppliers, has come down to $510-520/mt FOB Black Sea, with the midpoint at $515/mt FOB, losing $15/mt today and down $30/mt over the past week.