Russian billet exporters have managed to increase prices slightly in deals to Turkey and are hoping for some more increases, but in general the situation for the major Russian mills has failed to improve much with almost zero activity in other trade destinations and with profits being squeezed amid the latest strengthening of the ruble against the US dollar.
This week, a number of deals for late October-November shipment totaling over 50,000 mt have been done at $455-460/mt CFR Turkey. This price translates to $435-437/mt FOB Black Sea depending on the volume. The higher end of the range corresponds to small lots of around 2,000-3,000 mt, while the lower end is for deals for bigger volumes. In this round of sales, both Russian an ex-Donbass billets, produced in Ukrainian plants occupied by Russia, have been sold.
New offers have been mainly coming at $465/mt CFR, which is equivalent to $445/mt FOB Back Sea, but bids are still available at $460/mt CFR for November shipment.
“The Turks are still asking for around $460-465/mt CFR, but they're interested in prompt shipment. They want the cargo arriving in November in Turkey. Since we cannot predict the weather conditions in the Black Sea, we are not prepared to guarantee such dates,” a Russian seller said.
The SteelOrbis reference price for ex-Russia billet has settled at $435-445/mt FOB with the midpoint at $440/mt FOB Black Sea, up by $2.5/mt on average from last week, and $7.5/mt higher compared to two weeks ago when the previous round of sales from Russia was seen.
Despite some increase in billet export prices, Russian suppliers have been impacted by the stronger ruble. In particular, this week the exchange rate hit $1= RUB 78.8, from $1= RUB 81-84 during September, and the last time such an exchange rate below 79 was seen was in late July.
Squeezed margins for exports and the active Turkish market have resulted in almost the full exit of Russian billet exports from other markets like Egypt. The leading mill in Egypt has been asking for the equivalent of $565/mt in a market with lower prices and, even considering that this is down by $10/mt from last week, and also the safeguard duty, Egyptian buyers will ask for very low prices for import billet. Making simple calculations, given the local price minus the current minimum duty for import billet equivalent to $96.8/mt, the import price should be below $468/mt CFR. It is worth remembering that Egyptian buyers require wire rod grade billets, which have an extra of at least $10/mt. The freight to Egypt from the Black Sea is also higher than to Turkey, so the current low tradable price in Egypt can be considered only by Chinese sellers, sources believe.
