The situation in the CIS billet export market has worsened this week as demand from the major sales destinations, even including China, has slowed down. A number of sellers have decided to take a wait-and-see position and have rejected to cut prices or even offer at high level as they have not had a large unsold allocation. Nevertheless, some mills from the CIS have had to cut prices for signing deals.
For instance, one of the large Ukrainian producers has sold a relatively small cargo of 20,000 mt of billet to Latin America at $600/mt FOB base, while around ten days ago a sale to this destination was at $605/mt FOB or above.
A few large mills were able to sell sizable cargoes from Black Sea to China over the previous week or two at relatively high price levels – $705-717/mt CFR. “Big mills sold to China, when the window was open,” a trader said, adding that in October, producers will probably also target sales to distant markets like China. This week bids from China have been mainly at $700/mt CFR, which translates to around $600/mt FOB.
Following the sales to China and Latin America, and also taking into account expected reduction in steel production in Ukraine due to maintenances in October and raw material related cost issues, allocation of billet from the CIS has not been high recently. Moreover, “Russian mills will try to limit exports as much as possible for the shipment this year as the duty will be lifted from January,” a source said.
In Turkey, the situation in the billet segment has remained not promising for CIS suppliers. One of Russian sellers sold 10,000 mt of billet at $620/mt CFR last week, which is equivalent to $590/mt FOB. This week, the same mill has not been ready to cut prices below $600/mt FOB. This week import billet sales for ex-CIS material to Turkey have been seen only from traders for relatively fast lead times cargoes at $600-617/mt CFR.
The tradable price level for ex-CIS billet to North Africa would be $640-645/mt CFR at the moment, but as the freight is $50-55/mt minimum this level translates to only $590-595/mt FOB Black Sea.
The offer billet prices from CIS producers have been in a wide range recently, depending on the allocation left for the shipment in November-December. The lowest level has been available from East of Ukraine at $590/mt FOB, while at least one large producer has not been in the market recently and another one has been offering only December shipment material at $610/mt FOB or much higher.
The SteelOrbis reference price for ex-CIS billet has been settled at $595-600/mt FOB, down by $2.5/mt on average from the previous level seen from last week. The higher end of the range corresponds to the tradable price in the distant markets, while the lower end is equivalent the best price for the closer outlets.