The bearishness among Russian billet exporters has been aggravated in the current week, with bids from Turkish customers expected to seek lower levels after a sharp price drop in the latest scrap deal. But in the current conditions, some Russian mills may consider cutting production and offer volumes as, at the current exchange rate of the ruble to the dollar, sales to Turkey would be not profitable at all, according to market sources.
The latest negotiation level (and deals for a total of 10,000 mt) has been at $610-615/mt CFR Turkey this week, showing another drop. But subsequently a deal for ex-Belgium HMS I/II was signed at as low as $390/mt CFR, which is far lower than the previous ex-EU contract at $432/mt CFR and even lower than expectations of market sources, who thought the new deal level should be around $400-405/mt CFR. “It seems that the billet price should be at $600/mt CFR now,” a source said. Another trader agreed, but added, “This supplier was the only seller ready to give such a low level, at least yesterday. Others were not giving even $400/mt CFR. It will be interesting to see how the rest of the scrap suppliers behave. Though there are not many options. Turkish mills one by one are taking pauses as they are having technical repairs.”
“If the ruble does not fall against the dollar, the billet export market will face a vacuum as, at these prices and with the ruble at 60 and below to the dollar, mills are better off stopping production,” a trader selling Russian billet said.
As a result, the SteelOrbis reference price for ex-Russia billet has been lowered to $570-590/mt FOB Black Sea with the midpoint at $580/mt FOB, down by $5/mt from June 9 and down $12.5/mt over the past week. The lower end of the range corresponds to the latest deals to Turkey, while the higher end represents the majority of offers to Egypt.
