Turkish billet exporters revised their offer indications downwards last week for the third consecutive week from around $445-450/tonne fob to around $440/t fob. However, CIS producers' selling spree at considerably lower levels (see Kallanish 19 April) has brought Turkish billet export trade to a halt.
The ongoing softening sentiment in the Black Sea billet export market, reinforced by Egypt's new anti-dumping duty of 15% on billet imports, forced CIS producers to sell at $420/t fob Black Sea. This has effectively priced Turkish exports out for now. The decreases spread across to Asia, where some buyers are already indicating $450/t cfr as their best bid, emphasising Turkish billet exporters' need to reduce offers further in order to trade.
However, the resurgence in scrap prices, pegged by rising iron ore prices globally, is preventing Turkish mills from committing to lower-priced sales. Moreover, at $435/t cfr CIS billet is also becoming the feedstock of choice for Turkish re-rollers, with at least two producers booking last week, in the north and south of the country.
With further Black Sea billet price decreases to around $400/t fob on everyone's mind, Turkish billet export trade is looking sure to take a prolonged break, which may last until around mid-June. This is when mills will be looking to sell July-loading material.
Several market participants already foresee a quiet summer production schedule for Turkish and CIS mills due to sharply narrowing margins leading to reductions in capacity utilisation. CIS integrated producers are also feeling the pinch of higher iron ore prices, and are already informing their suppliers of the likelihood of lower needs during the summer months.