The general sentiment in Turkey’s billet market has remained pessimistic and the outlook has become even worse, following the recent import scrap price drop. Export and local demand for longs has remained insufficient, making mills provide discounts and putting pressure on billet imports. The announced decrease in energy tariffs effective from April 1 is another significant reason for the decline of workable billet import prices in Turkey as mills’ own costs of production will decline significantly.
While some suppliers have decided not to offer actively this week, some have chosen to offer aggressively in order to attract customers. According to sources, billet lots originating from Belarus and from Donbass have been offered to Turkey this week at as low as $583-590/mt CFR. The latest 3,000 mt deal from Donbass was closed to a buyer from Turkey’s Black Sea region at $605/mt CFR at the end of last week. “It will be no surprise for me if buyers push for an additional $10-15/mt lower for these origins,” a trader said.
The official offers from a large Russian supplier are standing at a higher level - $620-625/mt CFR, down $5-10/mt over the past week. There has been a rumour of a 25,000 mt sale at $625/mt CFR early last week, but it was denied by the alleged seller.
The SteelOrbis daily reference price for ex-Russia square billet is set at $570-595/mt FOB, with the midpoint down $12.5/mt since the end of last week.
With the announced 15 and 20 percent discounts on electricity and natural gas tariffs, the estimated rolling cost from scrap to billet is estimated at $170-180/mt. It means that, with the current $440/mt CFR for scrap, the cost of a producer’s own billet production will be $610-620/mt ex-works, which naturally creates additional pressure on import billet prices. Currently, the workable levels for a relatively “clean” Russian origin and for medium and large lots is evaluated at hardly above $600/mt CFR and will most probably be lower than that. However, the re-rolling companies may still be willing to pay $605-610/mt CFR levels due to the higher-priced domestic billet alternative.
The same factor makes the offers for the alternative origins of billet completely unworkable, if the sailing time is also taken into consideration. This week, China is offering at $630/mt CFR, around $10-15/mt higher is the estimated level from India. Malaysia, which is at $635-640/mt CFR and is a duty-free origin in Turkey, is still under pressure to decrease offer levels in order to get deals.
The local billet market in Turkey is silent and offers have decreased by around $10-20/mt over the past week. The prices in the Marmara region are at around $660/mt CPT but $10/mt lower bids might be workable. In the Iskenderun region, the indicative price is reported to be at $660-670/mt ex-works, down from $675-685/mt ex-works a week ago.
