The billet market in Turkey has been evaluating developments following the outbreak of war in the Middle East, trying to keep up with the possible consequences for the steel sector. While offers from Asia are still present in Turkey and are higher week on week due mainly to higher freight rates, Turkish buyers are hesitant and are expected to incline towards local purchases or Russian material, though only for small lots at the moment. While import scrap price levels are strong and will remain firm partially due to the freight rate situation, the $5/mt increase on the rebar side seen locally this week is not helping Turkish mills to increase their billet price indications. These remain roughly $10-20/mt below the current cost of production, which is evaluated at around $520/mt based on $370/mt CFR HMS I/II (80:20) scrap price levels.
This week, Turkey has restarted receiving offers from Malaysia for billet, with two traders in the market with May shipment cargoes. According to sources, a 50,000 mt lot is on offer at $505/mt CFR, and a 20,000 mt lot is offered at closer to $500/mt CFR. “There is a better chance for the smaller volume to attract Turkey’s attention, while only a few mills can afford to buy 50,000 mt. Local billet is roughly at same price level,” a trader told SteelOrbis. In addition, Ukraine is also back in the market with a limited tonnage of 10,000 mt for April shipment available at $530/mt CFR from one of the Ukrainian mills. “It is a bit high for the rebar segment, but for the merchant bar segment it can be booked maybe at a certain discount,” a local re-roller said. Another Ukrainian producer is out of the market currently, stating that it has no allocation.
Chinese offers were standing at $490-495/mt CFR earlier this week, inching down later to $485-490/mt CFR, with cargoes available for May shipment. Last week, Chinese billet was at $478-485/mt CFR. “Currently I don’t see any taker for Chinese billet and it is hard to understand the workable price. On one hand, it is for June delivery and things might have settled down by then, but on the other hand it is hard to say what will happen by then with Turkey’s long steel,” a producer source told SteelOrbis.
The SteelOrbis reference price for ex-Russia billet has remained stable on average at $435-445/mt FOB Black Sea, with the tradable level to Turkey close to the lower end of the range, while offers are at $440-445/mt FOB. A few sources in Turkey confirmed that, even though freight rates have increased a bit and are not below $25/mt from Novorossiysk, the tradable levels for Russian billets on CFR basis in Turkey have not changed much and are still at $460-465/mt CFR at the highest. “Russian billet can be sold at $460/mt CIF, but only small lots of around 3,000 mt for April shipment. But, generally, the Turks are refusing to buy now. Their freight rates for export shipments of finished products from Turkey (especially in containers) … have risen sharply,” a trader said, noting the rather limited demand for Russian billet in Turkey even at stable prices.
Meanwhile, Turkish mills are more eager to purchase scrap or pig iron. “Even with rising prices in China, demand for billets from Russia won't change [because even before the price increase the demand for large ex-China billet lots was limited]. But if Iran disappears from the market for a long time, then I think people will definitely start looking for Russian material more actively,” a Turkish source said.
In the domestic market in Turkey, where the rebar price levels have inched up slightly to $550-565/mt ex-works in offers, some mills have been attempting the same in terms of billet prices. In the Iskenderun region, a few producers are targeting $510/mt ex-works, up $5-10/mt over the past week, while others are still at $495-505/mt ex-works. In the Izmir region, some offers have been reported at $510/mt ex-works, with no deals heard yet.