Expectations for increases in ex-CIS billet export prices have failed to materialize and prices have continued to go down at the end of this week due to very limited demand and falling bid prices from the major destinations.
Most offers from major mills, mostly from Ukraine, have been heard at $630-650/mt FOB, with the higher end of the range corresponding to the official offer level, while the lower end is showing the real level in negotiations with producers. An offer for billet from eastern Ukraine has been heard at $625/mt FOB.
“They [mills] want to sell at $630/mt [FOB]... and the truth is that they may have sold at $620/mt FOBst with a premium,” a trader said, adding that in deals buyers would like to get $610-620/mt FOB at the moment, even though last week most sources expected prices to go closer to $700/mt FOB. “The market is not ready for any increase, and so suppliers will have to cut prices or stay away from selling,” another source said.
The square billet market in Turkey has been extremely quiet this week, partly as buyers had a lack of understanding of the local pricing. The indicative domestic levels are at around $690-695/mt ex-works still, but no fresh deals have been reported. Traders say Turkey would be paying $650-655/mt CFR at the highest for small lots, which corresponds to around $625/mt FOB or slightly above. Meanwhile, some customers have voiced even $640/mt CFR bids in the northern part of the country. Sources expect Kardemir to announce prices early next week and anticipate $675-680/mt ex-works levels or slightly below.
In other sales destinations, demand has also remained poor. The tradable value for import billet in Asia has come down to $670-680/mt CFR this week, with some limited tonnage of ex-CIS material sold in this range from Russian Far East ports, according to market sources. With the current higher freight rates, sales from the Black Sea region to Asia are not reasonable as the CFR price translates to about $610/mt FOB maximum.
The SteelOrbis reference price for ex-CIS billet has declined by $5/mt today, July 2, to $625-635/mt FOB Black Sea, which is $15/mt lower compared to last week.