Posted on 18 Nov 2020
CIS billet producers have started offering January-casting product, with offers reflecting recent scrap price increases of around $25/tonne in a week, Kallanish observes.
A Ukrainian integrated mill is indicating $450/t fob Black Sea for late January/February-loading material, while a Russian coastal producer's indication is $460/t fob for January-casting-and-loading billet.
There were no sales this week from Black Sea ports, but demand remains strong, and is likely to remain so, as the scrap price ascent is not considered to be over. Scrap offers are now circling $330/t cfr Turkey, and some sources do not rule out prices reaching $350/t cfr for premium HMS 1/2 80:20 in the upcoming round of sales.
Turkey is bound to be in the market for billet, as mills’ long products order books are well stocked for the first quarter, especially for wire rod, sources note. Turkish wire rod export offers have reached $580-600/t fob this week for end-February and March production, with Europe cited as having a seemingly "…insatiable demand". Although EU buyers are pushing for bookings of January-produced volumes, these are long gone, sources note.
Traders pin Turkish billet bids to start at $450/t cfr, after a Turkish mill sold billet in the domestic market at $470/t ex-works on Monday amid rising scrap prices. CIS supply is limited to small mills and traders, as large suppliers are focussing on Asia and the Middle East, sources say. Indian billet offers are at $480/t fob, targeting mainly China with shorter lead times than the CIS, they add.
China booked a few lots from Russian Far East producers, at $480-482/t cfr, in the last two weeks, and is looking for more tonnages still, according to traders. With iron ore continuing to strengthen and finished product stocks remaining moderate, despite imports, demand is well supported for now, sources say.
Most sources expect January-casting volumes to be sold at close to offer prices, but a correction – if only technical – is being expected. Several observers point to the ongoing weakness of the global economy and absence of new infrastructure spending, but scrap prices – the main barometer for Black Sea billet prices – are not expected to correct yet.
Supported by seasonal- and Covid-19 pandemic-induced shortages, the price of scrap is unlikely to collapse during the winter, keeping billet prices supported.
Source:Kallanish
