CIS-based billet exporters are optimistic about the market prospects for the coming weeks, seeing sharp increases in demand and prices for import billet in China. Though demand from Turkey is still not supportive, prices from the CIS have been on the rise.
According to sources, there have been no offers below $580/mt FOB Black Sea, while most large steel mills have been asking $590/mt FOB and above. The firm offers have been very limited, according to sources.
A deal for 50,000 mt of ex-Ukraine billet has been rumoured to China at $650/mt CFR, but a number of market sources denied that the deal was done. The CFR price level has been assessed as more or less reasonable in the current market, but there are doubts that the producer has such a big available lot. Also, sources reported that the chemical composition of the billets rumoured in this deal was different from the base grade and that extras should be included in the price. The freight from the Black Sea to China has been estimated at not below $60/mt.
Nevertheless, most market sources believe that China will be an attractive destination for CIS-based billet exporters in the near future. There have been firm bids for ex-CIS billet at $645/mt CFR, which corresponds to $580-585/mt FOB Black Sea. “New deals from the Far East [Russia] are expected to China soon, but sellers from the Black Sea also find bid support,” a trader said.
Though prices in the domestic billet market in China have already increased much over the past week, tight supply in the market and optimism in the long steel segment have continued to support the market price levels. Steel mills in Tangshan have increased billet prices by another RMB 20/mt ($3/mt) today, April 7, to RMB 5,060/mt ($776/mt) ex-works.
Apart from opportunities opening for CIS-based billet exporters in China, some demand may also come from Latin America. The target sales price level is $580/mt FOB, though no deal has been reported yet.
Despite overall optimism in the market, the weak Turkish market has been preventing ex-CIS billet prices from recording a significant rise. Despite the latest ex-US scrap sale to Turkey indicating a $6/mt hike in the HMS I/II 80:20 price to $436/mt CFR, the local rebar market has been putting pressure on billet prices in the country. For instance, local billet price sales have not been above $580/mt ex-works. Offers from traders for ex-CIS billet with shorter lead times have been heard at $580-590/mt CFR.
“In fact, we still do not see clarity in prices as there is a lack of orders,” a source said.
The SteelOrbis ex-CIS billet reference price has been increased from $570/mt FOB Black Sea to $570-580/mt FOB Black Sea, based on positive expectations and higher realizations possible in sales to China.