CIS billet finely balanced, China could raise prices

Posted on 15 October 2020

CIS billet export trade remains in the balance, with relatively low levels of demand matching an equally moderate amount of available supply. This creates a certain vacuum in the market for the involvement of traders, and stifles much needed momentum to establish future direction, market participants tell Kallanish.

With "…not so much" November-casting billet volumes left in the market, sellers' offers remain at $410-415/tonne fob Black Sea, depending on the mill and loading schedule. But demand remains at a much lower $400/t fob, although it includes China, stoking the opportunity for sellers to accept and close November and most December volumes with a few traditionally large sales. This leaves non-China trading channels without material.

As China's appetite for billet is assessed as still having potential to grow this month, there may even be an improvement on current price levels. This is another reason why sellers are keeping offers firm and waiting, a trader says. Already, $445/t cfr China has been achieved by a Vietnamese mill, although this material has a 2% duty advantage over CIS material, Kallanish notes.

Vibrant demand is coming from South America also, traders say, for various products, including billet. A 35,000-tonne Turkish high-carbon grade-60 (high carbon and manganese content) billet direct sale at an effective price of $411/t fob Turkey was concluded late last week. Another similarly priced 10,000t lot of Turkish billet was bought by a trader for Africa this week.

There are other supporting factors for Black Sea billet appearing, such as recovering Turkish import scrap prices, firm Russian domestic scrap prices and strong long products demand in Russia. The latter limits supply to the market by keeping seasonal sellers away from the already scarce market, as they continue to re-roll billet, which could be marketed for export, into rebar for domestic market. Several sources expect a mild winter also, with the extended construction season keeping long products demand propped up.

Source : Kallanish