This week, Turkey’s billet buyers have been showing limited interest in restocking, citing the slow demand for rebar, the continuous slide in prices and overall mixed expectations amid the approach of Ramadan and the holidays in China. While most import prices for billet remain at reasonable levels versus domestic billet production costs in Turkey, Turkish customers are cautious. “One issue is the 25 percent rule [under the inward processing regime], another one is the generally slow exports of longs from Turkey. In addition, the lead time is quite long, so it requires additional planning,” a trader told SteelOrbis.
The current billet offers from China have settled at slightly lower levels than in the past week - at $472-474/mt CFR in most offers, while the cargoes are available for April-May shipments. According to sources, a billet lot of around 45,000-50,000 mt has been recently booked by an Izmir-based mill at around $470/mt CFR for April shipment and the deal is widely considered to have in fact been done. Offers from Malaysia are not seen in the market, while Indonesia remains at $455/mt FOB or around $490/mt CFR Turkey for May shipments. Ukrainian mills remain out of the market partially due to production issues.
The SteelOrbis reference price for ex-Russia billet stands at $440-450/mt FOB Black Sea, which is only slightly down by $2/mt on the lower end of the range. Unlike the previous two weeks, even the limited trading of billets from Russia to Turkey has faded away and the market mood is rather negative. “So far, we don’t see bids for Russian billet even at $465/mt CFR [translating to around $440-445/mt FOB] for March shipment, which is strange as we expected higher for this lead time,” a trader said. Previous deals for Russian material were done at $465-468/mt CFR last week, as SteelOrbis reported earlier, which already market a slight decline from mills’ targets of $470-475/mt CFR. Russian mills can still offer the shortest lead time to Turkish customers, but, with the weak rebar market in Turkey, they have failed to achieve higher prices. “Sales to Egypt are also on hold, so there are no other options [where to sell] for Russian mills,” a source said.
In the local Turkish market, where workable rebar prices have slid to $535-565/mt ex-works and with demand remaining at low levels, billet offers have been mainly set at $505/mt ex-works, with no deals reported. Domestic billet production costs are assessed at $520-525/mt based on current scrap prices and so mills are not in a position to offer discounts. In addition, even with discounts, billet is unlikely to attract much additional interest in the Turkish domestic market.