The signs which have emerged of a price increase in the scrap segment in Turkey and the bullish mood in the billet market in the Far East have positively affected sentiment in the CIS billet market. Demand is expected to revive soon, but for now prices have failed to improve and rare buyers are still asking for discounts.
Most offers from large CIS-based exporters are still at $570-575/mt FOB and some suppliers are still officially asking for $580/mt FOB, having no need to sell at the moment.
But the tradable price level has slipped by $5-10/mt from last week to $555-560/mt FOB maximum, mainly because billet prices in Turkey have remained under pressure and buyers have been bidding at a low level. "We understand that if you want to negotiate the real sale you have to give $560/mt FOB or below," a producer said. As the latest deal in the local market in Turkey has been heard at $580/mt ex-works, most buyers will not be ready to bid above $570-575/mt CFR for ex-CIS billet, which corresponds to about $550-555/mt FOB.
Traders have still been asking for $585/mt CFR northern Turkey, translating to $565/mt FOB maximum. One offer has been reported at the same level to Iskenderun, and with the higher freight this price translates to $557-558/mt FOB. No new bookings have been heard from the CIS to Turkey lately as most market sources are waiting new scrap deals and the confirmation of the uptrend in the market. This is expected to support rebar prices in Turkey and will push up billet prices as well. “The market is definitely more optimistic. We expect more activity to come,” a trader said. “We are waiting for the next higher-priced scrap deals to increase billet prices,” another source said.
Apart from the good expectations for the scrap market, the positive situation in the Chinese market has brought more optimism. The workable level for ex-CIS billet in China has already reached $615/mt CFR. The negotiations have mainly been heard with producers in Russia’s Far East region, but suppliers from the Black Sea region have also started to check the Chinese market now. With the current freight from the Black Sea, which is starting from $60/mt from the Black Sea to China for large lots of 50,000 mt and more, the tradable FOB level is estimated at $555/mt for sales to China. “Mills may choose to sell there [to China] as prices are on the rise; most offers [for non-ASEAN billet] are at $620/mt CFR,” a trader said. “We see that the market is better, because mills will have the possibility to choose where to sell, even if the situation in Turkey does not improve fast,” a seller told SteelOrbis.
The SteelOrbis reference price for import ex-CIS billet has declined to $557-560/mt FOB, down by $6.5/mt from last Friday, due to low bid prices from the major outlets.