Russian billet exporters seek to hike prices, but pressured by surging freight rates

Wednesday, 05 October 2022 17:30:41 (GMT+3)   |   Istanbul
       

Russian billet suppliers have been hoping for a price increase and so have hiked their offer prices, especially for their regular customers such as Turkish importers. But since demand is still limited and freight rates have increased significantly since last week amid the increase in grain shipments, Russian billet suppliers have again come under pressure.

The SteelOrbis reference price for ex-Russia billet increased by $5/mt yesterday from $515-530/mt FOB to $525-530/mt FOB Black Sea. However, today prices have again been corrected down slightly, to $520-530/mt FOB.

In Turkey, import billet offers from Russia have remained on the scarce side this week since not a lot of sellers are present in the market. Some suppliers of Donbass origin billet are targeting around $580-585/mt CFR Bartin/Zonguldak and around $590/595/mt CFR to the southern regions of Turkey. A 3,000 mt billet sale was closed at $590/mt CFR to the Izmir region of Turkey for prompt shipment, SteelOrbis has learned. The level is considered to be on the high side since last week even offers at $550-565/mt CFR were not considered to be workable.

Aside from Russia and the Donbass region, there are prices for billet of alternative origins, which have lately been preferred by some mills in Turkey. According to sources, ex-Indonesia billet is on offer at $565-575/mt CFR depending on the volume for November shipment and beyond, while ex-Saudi Arabia and ex-South Korea prices are at $560-570/mt CFR, with no further details disclosed. “The higher prices are heard mainly due to the increases in freight rates seen again and also because today everyone in Turkey is trying to sell rebar at $700/mt ex-works and above. So, if they can sell, they would ask at least $650/mt ex-works for billet,” a trader said.

Freight rates for shipments of billets from the Black Sea region to Turkey have increased by $10-15/mt over the past week, according to market sources. At the moment, freight for shipment of a medium-size cargo could be $45-55/mt. “This is a disaster with freight due to the competition with grain. It is hard even to find $55/mt for shipment from the Black Sea,” a market source said, referring to smaller volumes up to 10,000 mt.

There has also been a rumour of a sale of billet to Europe from one of the major Russian mills, which is less sanctioned compared to others for now. However, there have been no details of this trade and no confirmation, with a number of market participants doubting it actually happened. Even though there is no ban on ex-Russia semis in the EU at the moment, the possibility of such a ban has been widely discussed in the market over the past week. Europe has approved the eighth package of sanctions and market sources believe that the Russian steel industry could be hit, but the final list of sanctions targeting individual persons as well as products has not been published yet.

In North Africa, demand for imported billets is still poor. The last offer to Tunisia was heard at $560/mt CFR, but sources believe that the price is a bit old and no deals have been reported to this destination. In Egypt, Russian offers are expected at $580-590/mt CFR ($520-530/mt FOB). “There are very few bookings due to the shortage of foreign currency,” a trader said, as no new deals have been heard over the past two or three weeks. The previous transactions were at $570-575/mt CFR.

In Asia, the attempts to increase prices by a large Russian billet producer, shipping from Far East ports, have failed. Like last week, offers for billet from Russia’s Far East region to Taiwan and China have been reported at $540-550/mt CFR, and this week some importers in Taiwan have been receiving $520/mt CFR. Moreover, bids in Taiwan are hardly above $505-510/mt CFR for ex-Russia billet. The market is waiting for China’s return from its holiday next week and some support for import billet prices in the region is possible only if China returns with a strong price hike in its local market.


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