The collapse of import scrap prices in Turkey over the past two weeks has had an impact more on rebar and local billet prices rather than on billet offer prices in the import segment. One reason is that the spread between scrap and import billet was already large enough and is now healthier. Another reason is that the prices for Asian billet, which represents most of the billet imports coming into Turkey, are determined under the impact of the market situation in Asia and China than by Turkey’s import scrap prices.
In the above context, import offers from China and Indonesia for end-of-June and even July shipments have remained at $455-460/mt CFR Turkey with almost zero interest from the Turkish side. “Scrap has fallen too fast and too deep and still we don’t know if it is really a bottom. Buying billet today for August [delivery] is a risky little game,” a trader told SteelOrbis. Malaysia is not quite firmly in the market with offers. Sources report that there is one position cargo available in the market from Malaysia at around $475/mt CFR, which is hardly workable.
The SteelOrbis billet reference price has settled at $420-435/mt FOB, with the midpoint at $427.5/mt FOB Black Sea, losing $7.5/mt on average since late last week. The lower end of the range represents bids for Russian billets from Turkish buyers, voiced at $440/mt CFR. But “no one is confirming this level. Until the ruble depreciates, Russia will not export billets,” a trading source said. Previous offers for ex-Russia billet were at $455-460/mt CFR or $435-440/mt FOB Black Sea for small volumes, but this week most firm offers have been withdrawn. The ruble exchange rate has been unfavorable for exporters recently with the lowest rate at $1= RUB 80.6 on April 21, versus $1= RUB 81-83 last week. In general, market sources expect the ruble to depreciate back to at least $1= RUB 90 in June, but for the near future the export environment will remain tough for Russian billet exporters.
With HMS I/II 80:20 import scrap prices in Turkey now settled at $312-325/mt CFR depending on the origin, down by around $60/mt on average from early April, domestic billet production costs are currently evaluated at $485/mt. Therefore, the gap with the current import prices from Asia is more reasonable now and Turkish mills, once they decide to restart imports, are expected to push for $445-455/mt CFR levels in deals, sources estimate.
The collapse of import scrap prices, however, has pushed down domestic billet prices in Turkey. Currently, the levels in the Marmara region are at $490-495/mt ex-works with $5/mt discounts possible, while in the Izmir region offers are at $505-507/mt ex-works, down from $515-520/mt ex-works earlier. In the Iskenderun region, according to market information, the local billet price in rare offers has been at $490-495/mt ex-works, while buyers are looking for $485/mt ex-works. “Since rebar is already at $535-540/mt ex-works, logically billet has to be below $500/mt,” a producer told SteelOrbis.
