Ex-CIS billet prices jump further in deals amid supply shortage

Friday, 21 January 2022 16:33:17 (GMT+3)   |   Istanbul
       

Prices for ex-CIS billet have kept going up this week and the pace of the increase has even gained momentum by the end of this week with higher levels fixed in the latest deals. Strong demand from Egypt has continued to provide strong support, while most large mills have claimed they have sold out the main share of their March shipment billets, and overall available volumes have been limited.

The new tradable price level and the SteelOrbis reference price for ex-CIS billet from Black Sea has reached $640-645/mt FOB, with the midpoint at $642.5/mt FOB on Friday, January 21, which is $20/mt higher than seen since Tuesday, January 18, and up by $25/mt over the past week. Three deals from different suppliers have been reported in this new price range.

Egypt is still the key driver of the price increase. The latest deal for 15,000 mt of ex-CIS billet for March shipment has been reported at close to $645/mt FOB Black Sea or around $675/mt CFR. “Demand is still there and business continues,” a trader said, describing the situation in the import billet market in Egypt. “There are few markets to support CIS billet prices, but they are enough to push prices up,” he added. Earlier this week, deals for ex-CIS billet to Egypt were done at $630-635/mt FOB.

Active sales over the past two weeks from the CIS to Egypt resulted in some significant shortages of billet allocation, and the mills, according to sources, each have only one large cargo to sell for March shipment, while some of them have already started to offer for April. From early January, Egyptian buyers purchased around 150,000 mt of billet from Russia and Ukraine and, moreover, demand for another 100,000-150,000 mt of billet is on the table, according to the sources.

Other North African buyers have been less active and they have been assessing the current prices as too high. There have been no new deals reported after two sales to different African countries heard early this week.

“A fair billet price for a number of buyers is $630-635/mt FOB,” one of the main selling mills said, adding that suppliers, in their turn, have a lack of allocation, and so they will insist on higher prices. Another producer from the CIS has also agreed that any large seller will be ready to give $630/mt FOB in the current situation.

The import market in Turkey has been mainly silent this week as the higher offers from the CIS, which have been actively selling to alternative destinations, have not matched most buyers’ bids. Turkish customers were seeking to purchase at as low as $640-650/mt CFR early this week and, even though later on some levels $5-10/mt higher were considered workable, the CIS mills have been insisting on up to $670-685/mt CFR in offers. Given the limited allocation on the large producers’ side, some demand is expected to be seen in Turkey for small ex-CIS billet lots for prompt shipment. While import activity has been weak, some considerable volumes were sold in the local market at around $650-665/mt ex-works depending on the region, in deals closed since the end of last week. “Costs in Turkey will rise [due to gas supply issue], but customers are focused on the short term needs and will choose a domestic source for this,” a market source said.

Latin America billet customers have also been in the market looking for ex-CIS billet this week.

Market sources believe that ex-CIS billet prices will continue to follow an uptrend next week and that $650/mt FOB could be reached some time soon. But further sharp rises are unlikely, given the already sharp increase seen over the past one-and-a-half weeks.


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