Some movement has been seen in the Turkish billet market by the middle of this week, given that domestic mills seem to be interested in imports of cheap ex-Russia billet, while the number of offers of Russian billet has increased. Along with cargoes from Abinsk and Novorossmetal, there seem to be fresh offers from traders for Russian origin billet and some of the buyers said there are new offers for ex-Donbass billet.
Some sources explain the interest in Russian billet by the desire of Turkish mills to sell their own billet at high levels and to cover their rebar rolling requirements by cheap imports. Another possible reason is the aim of the Turkish mills, who have not yet covered their scrap requirements for May shipments, to substitute some scrap lots by import billets, which are once again cheap. Still, a lot of players believe this buying of ex-Russia billet will not end well and that the risks of non-delivery are quite high.
According to sources, the Turkish billet market has been receiving a lot of import offers lately, specifically for Russian origin billet and mainly from traders. Several deals have been heard at $820-830/mt CFR and some market players assume the total tonnage of the bookings since last week to be close to 100,000 mt, but the information was not confirmed by the time of publication.
As per market information, some billet producers in Turkey have been actively seeking to export billet at the level of $900-910/mt FOB, $15-20/mt higher than the deals last week. “In this case, if they sell their own billet at $900/mt FOB and even at $20/mt lower than that, buying imports at $820/mt CFR might seem like a good idea for cost managing,” a trader told SteelOrbis. In the domestic market, a 10,000 mt billet lot was sold at $905/mt CPT Marmara, while the general level of local billet indications is at around $890-910/mt ex-works.
There is also an opinion that some Turkish mills may be aiming to substitute some scrap cargoes by import billet. According to the estimates, Turkey still needs close to 25 deep sea cargoes for May. “The Turks still take positions [for billet] as, especially against scrap, the prices are still good,” a trader said. However, some sources express doubts that buying billet in large lots from Russia is a good idea due to the risks involved. “If you are buying 20,000 mt lots, the risk of non-delivery is high. For 3,000-5,000 mt lots, you can buy and think if it comes, so much the better. And if not, there is nothing to do, but this will not have that much effect on your production for replacement,” another trading source said.
Overall, a lot of market players are watching the ex-Russia billet situation, trying to evaluate to which extent billet of the mentioned origin will remain present in the market. Some sources believe that there is a lot of manipulation and that, due to the payment issues and sanction risks, the buyers and traders in between might face some difficulties. “They [Russians] try to sell for May and I doubt half of these bookings will be performed. They need good cash to run those deals, and without LCs or down payments, they cannot produce. Plus, if the market [price] drops, the Turks will drop those contracts as well. So, it is a big gamble and good luck to those traders,” a billet supplier told SteelOrbis.
As for the billet of alternative origins, billet prices from Iran have increased by $20-30/mt over the past week to $800/mt CFR. No offers from India have been reported in the market. In the meantime, there have been some trial billet offers from Kazakhstan at $840-850/mt CFR Turkey, SteelOrbis has learned.