The outlook for ex-CIS billet export prices is more optimistic for October amid expectations of persisting demand from China, some support from other distant markets, and signs of scrap price increases in Turkey.
Market participants expect that ex-CIS billet prices will rise to at least $610-615/mt FOB in October, while they were fluctuating around the $600/mt FOB mark in September.
The expectations for China’s import market after the holiday (October 1-7) are optimistic as local rebar prices will remain supported by crude steel production cuts in the country. “China will return positively and restock, and so I believe prices will go up to $720/mt [CFR] again,” an Asian trader said.
Even though there has been a visible reduction in re-rolling operations this week in China due to the energy shortage and as overall demand for billets has slowed down, market sources do not expect import activity will be halted up to the end of the year. “October is a very good month for the longs market, and so billets will be needed. The only question is the volume,” a source said. “We are waiting for the post-holiday period to see liquid steel production and what the restrictions on re-rollers will be,” another trader said.
In case of continued severe cuts in re-rolling operations, some sources do not exclude rebar imports. “There is demand for rebar in China. Curbs on re-rolling mills will increase prices. There will be less capacities to use billets, but rebar will be still needed,” a source from the CIS said. In case of higher imports of rebar either in Southeast Asia or in China, this will have a positive influence on the CIS billet market.
The sentiment in the Turkish scrap market has improved this week and billet prices in the local market have also posted a slight increase. “Turkey has to export [rebar] for scrap prices to go up further,” a trader said. In September, most deals for ex-CIS billet to Turkey were by small mills or traders, all below $600/mt FOB. But in October if the tradable levels in Turkey increase, large CIS-based exporters may return to sales in this traditional region, while traders may be more willing to purchase material in positions from mills.
Moreover, the negotiations of CIS-based billet suppliers are going to be continued next week and producers are expecting some orders before the Chinese return from the holiday.
The SteelOrbis reference price for ex-CIS billet from Black Sea is at $600-605/mt FOB late this week, up by $5/mt compared to the level seen late last week.