We mentioned in our previous analysis that, due to strong raw material prices, global finished steel prices had maintained their high levels for weeks, despite low end-user demand. Raw material, semi-finished and finished steel demand coming from the Far East, in particular from China, became silent three weeks ago. Nevertheless, billet and finished steel prices in the global market had continued to stand at high levels.
However, in addition to the decreased demand from the Far East, demand for raw materials, semi-finished and finished steels has also shown a decline in the Middle Eastern market, due to the reduction of purchasing activities to minimum levels during the month of Ramadan. Thus, it is observed that finished steel and semi-finished material prices have deteriorated in the international markets, whereas scrap prices have maintained their strength.
In this stagnant situation, the Turkish mills, which had halted their scrap purchases for a while, have started to purchase scrap again. With the latest bookings, it is observed that scrap prices have decreased.
However, the deterioration in scrap prices has yet to be reflected in billet price levels. Turkish billet prices have this week continued to stand strong both in the domestic and export markets. Turkish mills' billet export prices are this week at $455-465/mt FOB. Meanwhile, CIS origin billet offers are in the range of $435-450/mt FOB CIS, unchanged as compared to last week. In the coming days, we will be better able to observe whether scrap prices will play an effective role in determining billet prices.