Changing freight rates and problems with finding vessels have exerted pressure on trading of ex-CIS billet lately. Though CIS based-suppliers are in a mood to increase prices, seeing a rebound in the scrap segment in Turkey, transportation issues remain the main problem.
Freight rates have increased to their peak level of the past two weeks, at $20-30/mt from the Black Sea to different regions in Turkey for lots which are not small in size. But in addition to this, it has been very hard to find a vessel lately and “people are not able to conclude deals because they can’t get freight commitments,” a source said.
The availability of vessels is unlikely to increase very rapidly even though Suez Canal traffic has resumed, sources said, while expecting the transportation issue to ease by mid-April or so. It has been quite risky for the CIS-based suppliers to conclude deals on FOB basis, as the buyer will face a big problem in dealing with the freight issue.
“Today, freight rates are higher than they will be in a month. This is causing difficulties,” a billet seller said.
Following the recent increase in scrap prices in Turkey, which have reached $430/mt CFR, CIS-based billet exporters have also been seeking to push up prices. Some large CIS producers have voiced offers at $580/mt FOB and the previously-seen lower level offers at $565-570/mt FOB have disappeared from the market. “It seems scrap is improving, but not that much [to support billet],” a trader said. As the latest local billet deals have been done at $585/mt ex-works, bids for ex-CIS billet are still low - at not above $575-580/mt CFR ($555-560/mt FOB).
The SteelOrbis reference price has increased indicatively to $560-570/mt FOB, up by $6.5/mt from March 30.