Ex-Russia billet prices loss $20/mt despite controversial market in Turkey

Wednesday, 24 August 2022 17:34:56 (GMT+3)   |   Istanbul

Prices for import billet from Russia to Turkey have dropped this week even despite some slight increase in scrap and limited number of suppliers in the market. The pressure from the Turkish customers’ side has been strong enough to lead billet price to fall by $20/mt since last week, while no other sales destinations have remained for Black Sea sellers.

There have still been a critically low number of offers from Russian billet sellers in the export market. “We are sold out until October 5 shipment… We are not offering for now. If we were in the market, we probably would be offering $560-565/mt CFR Marmara,” one of the sellers said.

Some rare offers have been heard at $555-565/mt CFR from Russia to Turkey this week, but taking into account the abovementioned deals and falling bids, these prices have been considered as not workable and not reflecting the current market, even despite some rises seen in the latest scrap deal. “I believe buyers would accept $530-540/mt CFR if they will catch a seller at these prices. As the scrap is more expensive, mills in Turkey are considering buying import billets as it is a cheaper option compared to their own production,” a trader said. Market sources doubt that the uptrend in the scrap segment has strong fundamentals and the deal at above $400/mt CFR for ex-US HMS I/II has rather an exclusion due to the mills’ need to purchase. However, another thing is that Russia’s billet trade might be under pressure in Turkey, taking into account the recent US warning to Turkish companies, who would work with the sanctioned entities.

According to many buyers, basically only one Russian mill is in the Turkish market nowadays and, moreover, it seems to have managed to close several deals, though at a considerable discount over the week. Sources state that a few 5,000-6,000 mt billet sales were closed by an ex-Russia producer at $535-540/mt CFR, while some report $530/mt CFR level has also been fixed. In addition, there have been talks about large Turkish mills being in the market to buy billets and they have been expected to push Russia for below $520/mt CFR. “I still think they [Russian supplier] will combine all lots. For 5,000 mt only the freight should be max $45/mt, and min $39-41/mt if they catch a Russian vessel,” a trader told SteelOrbis.

According to market sources, the latest deal prices to Turkey corresponds to $495-505/mt FOB Black Sea as the highest and down to $490/mt FOB, depending on freight assessments. For a number of Russian mills this level is under the costs, taking into account high scrap prices in the local market and strong ruble, but from the other side, this price range has been assessed as the real market for now. Apart from Turkey, there has been no demand for ex-Russia Black Sea billet. “There are no firm offers, because no one is interested to buy [in North Africa],” a source said.

So the SteelOrbis daily reference price for ex-Russia billet has been corrected down by $20/mt on average from $515-520/mt FOB to $490-505/mt FOB with the midpoint at $497.5/mt FOB Black Sea.

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