Higher energy costs announced by the Turkish government on September 1 have boosted higher price expectations in the steel market of Turkey, specifically in the billet segment. In particular, higher domestic and import offers have been anticipated, taking into account that Turkish mills were foreseen to not be so eager to produce excessive billet tonnages for local sales and that some volumes would have to be compensated for by imports. However, while import billet offers are again under pressure from decreased scrap prices and as domestic billet prices have risen only indicatively, Turkish mills have begun billet exports, supported by the demand coming from the EU and are competing there with Asian suppliers.
The steel production cuts, already announced and expected in the EU due to the energy crisis and increased costs, have naturally urged producers to seek external semis sources in order to keep up the balanced longs supply to the market. As a result, recently, there has been strong interest in billet from Indonesia, which has offered around 100,000 mt in the market. According to sources, up to 80,000 mt were sold in the past week to Germany, Poland, Spain and Africa from Indonesia, while the deal prices to Europe were at around $600-630/mt CFR. The most recent offers have been reported at $645-650/mt CFR, specifically in the Italian market.
The increased demand for billet in Europe has also supported Turkish mills, which were offering minimum $650/mt CFR EU starting from the end of last week. According to sources, a recent 10,000 mt billet deal was closed to Italy at $672/mt CFR or around $625/mt FOB. “The closer location and shorter lead time are the advantages of Turkey while ex-Indonesia billets will be seen in the EU only by December,” a trader told SteelOrbis.
Some Turkish mills have voiced $650/mt FOB as their new export billet offers, specifically for the south of Europe. However, some market sources believe Turkey will not be able to achieve such a price level, given the drop in the ex-US scrap price levels.
Locally, billet offers in Turkey remain indicative and at around $630-640/mt ex-works, particularly in the Iskenderun region. Some buyers count $620/mt ex-works being available soon, SteelOrbis understands.