The billet trade from Russia to Turkey is continuing despite rather serious financial and reputational risks due to sanctions already imposed and further anticipated ones. Some sources say the deals are for some ready cargoes, as there are a lot of risks for new shipments, and so it is not yet clear how sustainable this trade flow will be in the coming months. The payment issue is considered to be a major one, although the sides seem to have found several ways to bypass the sanctions, while operations are now certainly more expensive and complicated.
According to sources, a medium-sized lot of ex-Russia billet was sold to Turkey at $835/mt FOB or around $850-860/mt CFR. A similar price was also fixed by another Russian mill in a sale to Egypt last week, as SteelOrbis reported. As for Turkey, the current offers from traders vary within $850-890/mt CFR depending on the origin and lead time. “They are here to sell for various origins, including India and Iran, but it seems not all Turks are ready to buy imports today,” a source said. The lowest offered price in the market has been reported at $840/mt CFR, supposedly for billet from the east of Ukraine, in case some seller has a ready cargo at some Russian port. The highest offer has been voiced at $900/mt CFR for small lots of ex-Russia billets for immediate shipment, SteelOrbis has heard. In the local Turkish market, offer prices for billet are unchanged for now at $920-950/mt ex-works depending on the region and the mill.
As a result, despite the sanctions imposed by many countries against Russian banks, various entities and industries, and Russian steel mill owners, Turkey has still found a way to buy steel from Russia. The payment issue seems to have been worked out for now and, according to the market information, there is the possibility of conducting payments in Turkish lira or gold. Others say that it is possible to work via telegraphic transfer (TT) payment or cash payment upon arrival. “The risk is high but maybe the customers are willing to pay once a cargo is in port. Another factor could be that these companies will use their trading arms in Switzerland to collect cash from customers, but they will not be able to transfer it to the mills. So, after some time they may just take the money and close down the Swiss operations,” a large trader said. It is worth mentioning that in Asia the payments seem to be less of a problem as some banks are still opening LCs and Russia sold at least 50,000 mt to the region last week.