After a pause, a new deal for ex-Russia billet has been signed to the Philippines early this week. The price for ex-Russia billet is lower than the latest ex-ASEAN or ex-China IF/BOF billet prices, which was the main reason for the resumption of buying Russian material, which has been under Western sanctions after Russia invaded Ukraine in 2022. Even though buyers in the Philippines were claiming they would avoid buying from Russia due to the sanctions and volumes dropped significantly in the first six months after the war started, later some regular booking continued, even though overall sales volumes became lower than previously.
A deal for 26,000 mt of ex-Far East Russia billets was signed at $510/mt CFR Manila yesterday, July 18, while the reference price in the market, mainly reflecting the tradable level for Asian billets in the region, was at $518-520/mt CFR. This price translates to $485-490/mt FOB Far East Russia ports. Some sources have said that the real price level was rumored at even $500/mt CFR, but this has been denied by a number of sources, who said that this level may be targeted by buyers in the next negotiations, if there are any. “Russian tonnages can be a big disruptor, nobody wins,” a trader commented.
The previous ex-Russia billet deal, done by another Russian mill located in the Far East, was reported at $505-510/mt CFR to Taiwan.
“I can see that Russian mills want to sell slabs here [in Asia]. Billets may also be in focus,” an Asian source said.
Taking into account the falling billet prices from the Black Sea, which stood at $450-470/mt FOB early this week, the Asian market may be attractive for Russian sellers. The last bids for ex-Black Sea billet from Turkey were already as low as $460/mt CFR versus offers at $480/mt CFR. So even though the freight and lead times are smaller for Russian sellers in sales to Turkey, the Asian market may have the price advantage. With freight of around $40/mt for a large vessel, the CFR price that Russian Black Sea-based mills can offer could be $500/mt CFR. “We haven’t seen this [increase in ex-Russia billet supply], but maybe only so far. I think it is very possible,” an international trader said. However, the risk of sanctions and weak demand, especially for large volumes in Southeast Asia, may be a big issue for increasing billet sales from Russia to Asia.