Prices for ex-Russia billet have retreated after the very short rebound seen earlier this month. Increasing supply from Russia itself, some slight devaluation of the ruble from the previous levels and tough competition with China have contributed to the decline.
Over the past ten days, Russian sellers have managed to sign deals for over 100,000 mt just to Turkey. The first contracts were signed at $455-460/mt CFR as was reported by SteelOrbis in the middle of last week. But the latest 50,000-60,000 mt of billets have changed hands at a slightly lower level - $453-458/mt CFR. This level translates to around $433-435/mt on FOB Black Sea basis. “The supply is very high, even just talking about the CIS region,” a Turkish source said.
One of the reasons for more active offering by Russian mills has been the recent depreciation of the ruble. After the exchange range hit its critical level of $1= RUB 78 seen in the middle of last week, today it came back to $1= RUB 81-82. “It’s still bad, but at least not below $1 = RUB 80,” a trader said, commenting on the recent acceleration of sales from Russia. He also confirmed that large mills from Russia, which were officially targeting $445/mt FOB last week, have now eased their targets to around $437-439/mt FOB.
In Turkey, an additional factor impacting prices is the tough competition with Chinese billet sellers. Chinese prices have added a few US dollars over the past week to $460-465/mt CFR for December shipments, while the most recent deal for 50,000 mt was mentioned at $457/mt CFR Iskenderun region. In addition, according to market sources, another 20,000 mt have been booked at the same price to the Izmir region, although many agree that the purchase of a full cargo would make more sense.
In addition, there has been a rumor that 20,000-30,000 mt of Russian billet has been traded to Egypt, which translates to around $460/mt CFR, excluding extras for DWR grade. This price translates to around $430-435/mt FOB base grade but has not been confirmed by the time of publication. Some market sources in Egypt and elsewhere think the price is rather high for the majority of buyers as adding the safeguard duty it is in line with local prices.
The SteelOrbis reference price for ex-Russia billet has settled at $430-438/mt FOB Black Sea with the midpoint at $434/mt FOB, down by $6/mt compared to last week.