Following several import billet deals from Asia to Turkey done over the past couple of weeks, the pressure on the import prices has increased a lot this week, given the continuing decline in the import scrap segment. In addition, local and export longs sales have been decreasing lately, making billet importers watch their licenses more carefully. With scrap at around $340/mt CFR for premium quality, captive billet production costs in Turkey stand at around $490/mt maximum, creating pressure on import offers, especially in view of the generally low market expectations.
Turkey’s integrated Kardemir as expected announced domestic billet sales, at $495/mt ex-works for S235JR and $520/mt ex-works for B420. The supplier has sold at least 70,000 mt of billet locally and, according to sources, such demand is justified first of all by the attractive price, which is by around $5-10/mt lower than initially expected. Secondly, slow export sales prevent re-rollers, especially in Turkey’s Black Sea region, from importing from Russia and Donbass. “There are serious issues with export sales of longs now, so if you cannot predict what you can sell and therefore import billet, then sourcing semis locally is the only choice,” a trader told SteelOrbis. The domestic price of other suppliers of billet in the local Turkish market is rather unclear. “Logically, even in the Iskenderun region it should be not higher than $520/mt ex-works now,” a source said. At the end of last week, the general range of billet offers in Turkey stood at $530-555/mt ex-works depending on the region.
Import offers from Asia, mostly for February shipments, though somewhat decreased, are of almost no interest in Turkey, at least for now. Malaysia and Indonesia are at $500-510/mt CFR this week, down around $5-15/mt depending on the supplier, while China is at $480-490/mt CFR, sources report. At the end of last week, a deal for a 40,000-45,000 mt billet lot was reportedly booked at $485/mt CFR and, despite the absence of full confirmation, it is mostly believed to have actually been done. Ex-Ukraine billet is offered in Turkey this week at $510/mt CFR, according to several market sources, while in Egypt a large lot was sold at below $515/mt CFR effective, SteelOrbis has heard. Chinese offers in Egypt have been reported this week at $510-515/mt CFR effective, down from $520/mt CFR last week.
The latest small-volume deals for January shipment billets from Russia have been done at $460/mt CFR, translating to around $440/mt FOB Black Sea or slightly below, while last week the tradable level was at least $10-15/mt higher. “But bids for big lots have already been at $440-450/mt CFR. The Ruble/US dollar rate has gone crazily low and scrap is going down,” a Turkish trader said. On November 28, the ruble depreciated to $1 = RUB 109, from $1 = RUB 100 last week.
A number of market sources have confirmed that the current workable price for ex-Russia billet for medium and small lots, considering the fall in scrap and recent sales in the local market, is at $450-455/mt CFR Turkey at the highest, which is equivalent to $430-435/mt FOB.
“Next week it [Russian billet price] will be at $430-440/mt CFR TBS [Turkish Black Sea],” a Turkish mill said, adding that mills have already being giving firm bids at this level. There has been talk in the market that a main Russian mill has already accepted a bid at $430/mt CFR, but this has not been confirmed by the time of publication.
The SteelOrbis reference price for ex-Russia billet has settled at $430-435/mt FOB Black Sea, falling by $20/mt over the past week. The lower levels at $420-425/mt FOB have not been included in the reference price range yet, with no confirmation of a deal and the resistance of other Russian sellers to go below $430/mt FOB for now.