Prices for ex-Russia billet have continued to fall despite the huge losses already seen last week. Bearish sentiments in both finished steel and scrap segments and critically weak demand have pushed billet prices down. But some suppliers from Russia have decided to withdraw offers for now, assessing the market and the rationality of export sales, market sources told SteelOrbis.
The SteelOrbis reference price for ex-Russia billet has been lowered to $510-520/mt FOB Black Sea with the midpoint at $515/mt FOB, which is down by $5/mt on average from yesterday and down $15/mt from late last week. “Wherever it goes, we wait to be stopped at any level. As the decrease continues, no one will be willing to buy and sell,” a Turkish source said.
Prices available from large Russian suppliers at higher levels last week ($540-550/mt FOB) have been mainly withdrawn by sellers as they are not reflecting the market conditions. As prices from Russia slumped $50/mt last week, market sources have started to question where the bottom is, taking into account costs. “I think there is no limit there. Production continues. If they can’t sell, they have to go below $490/mt FOB. But as for lower levels, let’s wait and see,” a source told SteelOrbis.
In Turkey, import billet pricing has been vague this week, mainly because of the effect of falling scrap. While some Russian suppliers have decreased their billet prices for Turkey further this week and different levels have been heard in the market, others have decided to step back, not being willing to sell many lots below their production costs. In the meantime, the buyers, despite the already provided discounts, have also mainly been silent, being quite sure there are more price decreases to follow. One reason is another price decrease for import scrap, another one is that it is known in the market that Russia has not many options and room in billet sales, while they also need cash. This week, many sources reported $550/mt CFR offers from Russia, specifically for Ukranian ex-Donbass billet offered by Russian sellers, while the lowest known sale of the past week was at $565/mt CFR. Some levels of $530/mt CFR have also been floating in the market and some sources assume this price was under negotiations. However, nowadays a lot of players believe Turkey’s price idea for import billet will be closer to $510-520/mt CFR. “Every day buyers don’t deal, the next day the price is cheaper,” a seller told SteelOrbis. The average freight to Turkey is estimated at $40-50/mt to the Karabuk and Izmir areas.
Some higher prices in comparison to Turkey have been seen in North Africa. In particular, a deal by a Russian seller has been heard to Tunisia at around $565/mt CFR, which corresponds to about $520/mt FOB or so. This cargo has already been redirected twice and was previously heard as having been sold to Turkey last week.
In Egypt, as SteelOrbis reported, the latest deal for a small ex-Donbass billet volume was closed last week at $595/mt CFR, followed by bids declining to $580/mt CFR. This week, however, the actual offers from Russian sellers have declined to $570/mt CFR but the bids are again at least $20/mt lower than that. “After $330/mt for scrap, even $550/mt [CFR Egypt] for billet will not be accepted as the buyers know the situation,” a trader said. An offer at $570/mt CFR is translating to $520/mt FOB Black Sea, taking into account freight for medium and large lots.
Ex-Russia billet offers have been reported in the GCC region as well this week, although the buyers seem not to be so interested in these offers. Traders are in the market with $575/mt CFR offers to Saudi Arabia, with the estimated freight for regular 30,000 mt lot at $60-65/mt if shipped from Novorossiysk. No solid talks have been reported with buyers from the UAE and Oman, although some traders have been trying to make an offer. Local buyers, however, are skeptical and do not think there will be any business. “It is not about the sanctions. UAE and Oman would buy in 10,000-15,000 mt lots, which would mean over $70-80/mt freight from the Black Sea, or even more. So, let’s say $600/mt [CFR] or lower would be offered, while we have the same levels from Iran here,” a UAE buyer said. Indeed, Iranian cargoes are on the table at $600/mt CFR, while offers from Oman are at $620-630/mt CPT UAE.