Having purchased billets in recent weeks from the CIS in particular due to the strength of scrap prices, Turkish EAFs have been buying billets from Russia, Ukraine and Europe in recent days for the same reason. Following the deal for ex-continental Europe HMS I/II 70:30 scrap concluded by a Turkish producer two weeks ago at the price level of $218/mt CIF Turkey, a deal for the same grade scrap has this week been concluded by another EAF in Turkey at the level of $227/mt CIF Turkey. While ex-Europe HMS I/II 70:30 scrap has been maintaining its strength, it is observed that the costs of scrap-based billet and rebar production have now exceeded the costs of purchasing billet from the CIS or Europe and of producing rebar from this billet. Due to the tightening in end-user demand and due to the softening in finished steel product prices, producers are now more sensitive in their cost calculations. Thus, the Turkish mills sometimes opt to purchase billet instead of scrap.
While ex-CIS billet offers have been at $320-330/mt FOB Ukraine from traders, producers' offers have not been heard to decline below $330/mt FOB. Meanwhile, Turkish producers are offering billets to the export markets at price levels of $360-370/mt FOB.
The billet price level of $343/mt ex-works, excluding VAT, which was announced by a local producer in Turkey this week, was accepted by rolling mills, with a total of 30,000 mt of billets being sold. However, billet prices in the Turkish domestic market are still said to be at high levels. Considering the mentioned local rebar price level of TRY 800/mt including VAT (approx. $401/mt excluding VAT) ex-warehouse, it appears likely that the rebar rolling mills in the local market will experience difficulties in maintaining their production operations.