Posted on 06 Apr 2020
The forthcoming reduction in Egypt's billet import duty and the fall in CIS billet prices amid the Covid-19 outbreak has produced fresh demand among the country's re-rollers. As a result, up to 50,000 tonnes of billet from the CIS was booked during last week, Kallanish calculates.
Three Russian billet cargoes of a combined 25,000t were sold by a trader last week at $357/tonne, $360/t, and $362/t cfr Egypt with April loading. Another, local trader, was also heard to have been negotiating a Ukrainian billet purchase. Sources also talked of Turkish billet being booked by Egypt, but this could not be confirmed by publishing deadline.
The safeguard duty of 16% on the cif price, or a minimum of $74/t, was levied by Egyptian authorities in April 2019 for 12 months. It will be reduced to 13%, or a minimum of $60/t, from 12 April, which in conjunction with lower billet prices, brings Egyptian re-rollers back into the frame. Almost two dozen Egyptian longs re-rollers were forced to suspend production at the end of January, amid a shortage of affordable billet exacerbated by import duty.
At the time, the country's re-rollers’ cost of production was around EGP 10,500/tonne ($665/t), but rebar sales prices had fallen to EGP 9,500/t, resulting in a loss. The combined production capacity of the mills affected was around 150,000 tonnes/month. Rebar prices in Egypt are still at around EGP 9,500/t levels. Lower Black Sea billet export prices, however, mean re-rollers are able to import and produce without a loss for the first time in almost a year, sources say.
CIS billet exporters were heard to reject bids below $330/t fob last week, with one, scrap-based coastal mill continuing to indicate $340-350/t fob, but with shorter lead times. The apparent Turkish scrap import price rebound, which may well consolidate this week due to a shortage of European and US material, is also supporting billet rebound sentiment.
A Turkish mill that was heard booking Russian billet at $325/t cfr Iskenderun denied the purchase. Sources suggested Iranian or eastern Ukrainian mills were offering at this level.
Traders remind that “...demand remains king,” and that the rising dynamic will only stick if there is sufficient demand for billet and long products, regardless of raw materials' price dynamics.
Source:Kallanish
