CIS billet market in lull, some offers rise

Posted on 21 July 2021

The CIS billet export market has descended into a lull as some suppliers increased their offers, encouraged by China's rising appetite for imported billet. The majority of buyers remained on the sidelines amid the ongoing Islamic holidays, Kallanish notes.

Offer indications were heard at $660-670/tonne fob Black Sea from Ukrainian suppliers. Some Russian indications were lower, at $650-660/t fob levels, but they were still too high for what those buyers in need of material would be ready to pay. Although there were no active bids in the market in the past week, based on Turkish scrap prices the country's re-rollers' interest was assessed at around $660-670/t cfr and Tunisian at $670-680/t cfr. This nets back to $640-645/t fob Black Sea, "considering freight rates do not rise again in the next few days", a trader says.

Most buyers are constrained by the rebar and wire rod price dynamic, and are finding billet sourcing difficult at these prices. Russia’s forthcoming ferrous export tax has so far failed to propel prices up, as was partially anticipated. However, some mills are eyeing China's output curbs as a prequel to a particularly active fourth quarter, when demand for large lots of CIS billet may flourish. This will depend on freight rates too, which are currently at $70-80/t from the Black Sea, but expected to continue to rise throughout the year.

On the other hand, it is not known at what level Chinese authorities will curb domestic billet prices, which will have an immediate effect on import appetite and prices. A Russian mill sold billet to China from the Far East in the past week, but these sales would not have been workable from the Black Sea.

Market participants say the firm achieved $715-725/t cfr China for its October-loading billet, but some doubt the higher level, as there is high availability of regional origin offers, at lower, $710-715/t cfr prices. That said, most sources are confident in China's billet prices reaching and exceeding this level soon.

Source : Kallanish