Prices for ex-CIS billet have declined slightly this week, which has been an expected reaction to lower scrap prices in Turkey. The trading activity has slowed down significantly as billet importers from Turkey have just been watching the market. At the same time, many CIS-based producers have been unwilling to cut prices immediately, even when they have unsold volumes.
A deal for 15,000 mt of ex-CIS billet from a trader has been reported to Tunisia at $610/mt CFR this week, which corresponds to about $575/mt on FOB basis, taking into account increased freight rates. No new bookings have been heard from mills, who managed to sell some volumes at as high as $585-590/mt FOB last week. “We offered $585/mt FOB, but now it is clear that buyers will ask not higher than $580/mt FOB,” a Russian producer said.
Most Turkish customers have taken a wait-and-see position after the decline in import scrap prices below $460/mt CFR. The indicative level for import billet is $605/mt CFR, which translates to $585/mt FOB Black Sea.
As the downtrend in the scrap segment has become a surprise for CIS-based billet sellers, they have decided not to drop prices for now and just watch the market. “The change in trend in scrap is very fresh. We need more time to see all the reactions,” a seller said.
A number of market sources believe that the recent retreat will be short-lived. “It’s a quiet period and the market should pick up next week. China will be back with huge requirements in the coming days,” a trading source said. Today, rebar futures in China have increased by 1.96 percent compared to the previous trading day, bringing some hope for a resumption of import activity.
The SteelOrbis reference price for ex-CIS billet is $575-585/mt FOB with a mid-point at $580/mt FOB, down by $5/mt on average from early this week.