Billet trade has been relatively lively in Turkey this week but, as previously, only for the material with shorter lead times, which leaves out most Asian cargoes, at least for now. In addition, the recent increase in talk in China about restricting semis exports is making Turkish buyers even more cautious towards purchases, while anticipated production cuts by Tangshan are supporting the price increases. As a result, Turkish buyers prefer local material or ex-Black Sea billet, with some transactions done recently.
Turkey’s interest in billet with shorter lead times is also due to the aim to minimize risks as mills are squeezed between high production costs and little possibility of pushing down scrap prices in the short term, and slack sales of rebar. Moreover, the recent increase in natural gas prices adds a few US dollars to Turkish production costs. Currently, domestic EAF-based billet production costs are evaluated at $170/mt, with the average scrap price at $340/mt CFR.
Turkey’s integrated producer Kardemir announced fresh billet sales on July 2 at $485/mt ex-works for S235JR grade and $495/mt ex-works for B420 material, down $10/mt from the mill’s previous offers in early June. Given Kardemir’s rather long absence from the billet market, overall acceptable prices and the possibility of deferred payment, the mill closed sales within only a couple of hours, selling a total of 47,500 mt. In other regions of Turkey, billet offers in the Iskenderun area have slid by around $5/mt over the past week to $495-497/mt ex-works, while in Izmir one of the mills is indicating $505/mt ex-works, a couple of US dollars compared to last week. In the Marmara region, the latest billet offers have been reported at $490/mt ex-works. However, with the recently announced filing for bankruptcy proceedings by local billet supplier Sıddık Kardeşler Haddecilik, supply in the region may be limited.
Today, July 2, the Chinese steel market has posted a rebound after prolonged stable to negative developments for the past few weeks. This happened mainly amid rumors about 30 percent steel production cuts in Tangshan until mid-July. Though ex-China reference prices have remained stable at $420-430/mt FOB, market sources said the rare offers are not below the higher end of this range. The Indonesian mill has also increased its October shipment billet offer from $425/mt FOB to $430/mt FOB.
In the import segment in Turkey, offers from China stood at $458-462/mt CFR earlier this week, for end-of-August and September shipments, up $7-8/mt from last week. However, as of today, July 2, the level is estimated at $465/mt CFR and above due the increase in futures prices related to the recent statements made in China. “Chinese and most other Asian origins are for deliveries in late October and most Turkish buyers will most probably not risk it, at least not now,” a trading source told SteelOrbis. Indonesian material is at $430/mt FOB which is around $465/mt CFR Turkey, but since it is for October shipments the buyers are not interested.
An ex-Malaysia 150 mm billet cargo for end-of-August shipment is at up to $490/mt CFR, while, according to sources, another ex-Malaysia lot of 20,000 mt is currently on the water, with offers at around $480-485/mt CFR Turkey. In addition, as expected, Turkey has been interested in ex-Ukraine material, which was on offer at $490/mt CFR last week. The workable prices for 10,000-15,000 mt lots currently stand at $485-492/mt CFR for end-of-July and mid-August shipments depending on the mill.
More interest in Turkey’s import billet market has been seen for ex-Russia billet for closer lead times. There has been a rumor about an ex-Donbass sale at $455-456/mt CFR, which is up from the previous $445-450/mt CFR. But this has remained unconfirmed by the time of publication. And only another deal for ex-Russia billet has been heard at close to $455/mt CFR. This price level translates to $435/mt FOB Black Sea. As a result, the SteelOrbis reference price for ex-Russia billet has settled at $435/mt FOB, versus $425-433/mt FOB late last week.