Billet trading activity has failed to improve this week particularly in the Black Sea and Mediterranean Sea regions. The weak scrap prices and strong expectations for scrap prices to go down further are the main reasons for billet buyers’ cautious stance towards purchases. Turkey, which is the main buyer in the region, has been silent in terms of large-volume bookings, since the Turkish mills would like to evaluate their own lowest achievable billet production cost. As a result, ex-Russia FOB prices have slid over the past week and sources mainly believe the bottom has not been reached yet.
The SteelOrbis reference price for ex-Russia billet has slipped to $530-540/mt FOB, down by $7.5/mt from yesterday and down $10/mt over the past week. The price is based on the workable levels that buyers can consider and sellers can provide, though suppliers are still reluctant to accept rapid decreases, as sought by customers. “We would like to have $570-575/mt CFR [$545/mt FOB Black Sea], but the Turks will not accept this. They want $555-560/mt CFR [$530/mt FOB], and it is hard for us,” a Russian supplier said.
Overall, the mood in the Turkish market is pessimistic due to the expected further drop in import scrap prices. As a result, while mills either refuse to negotiate for large lots or place extremely low bids, merchant bar producers and rebar re-rollers are in the market, but are also pushing for lower levels. One Turkish importer, who booked ex-Russia material at around $570/mt CFR last week, has cut its bids further, but “the level of $550/mt CFR, that they want, is not available yet,” a trader said. As SteelOrbis reported, last week there were several deals within $565-575/mt CFR and one at $578/mt CFR for around 15,000 mt in total. All cargoes are around 3,000 mt each and for prompt shipment. Aside from Russia, this week there have been offers from Iran at $530-540/mt CPT for small lots, but the workable level is estimated at not higher than $505-510/mt CPT. In the local Turkish market, the price level remains indicative at around $600-610/mt ex-works, but the workable level may be at least $10/mt lower than that if import scrap prices dip further.
In the Far East, the downtrend has also continued. The fresh offers from the major Russian mill shipping from Far East ports are at $525/mt CFR for 130 mm 5SP billet. There has been information that the previous deal for 20,000 mt of ex-Russia billet was done at $530/mt CFR, but, given the lower offers available this week, the contract should be from last week, according to sources.
