Posted on 09 Dec 2020
The CIS billet price increase has resumed after a pause last week, with at least one new Turkish booking at higher prices, Kallanish learns.
A Russian mill sold billet at $527/tonne cfr Turkey late last week, as scrap prices continued to rise and could hit $400/t cfr this month, according to numerous traders. But the alleged purchase by a Marmara-based mill of a large consignment of Ukrainian billet at $540/t cfr this week is being questioned by several sources. They say this could be drawing-grade material or a Qatar-origin cargo. The sale would net back to around $528/t fob Black Sea.
This level is likely to have been paid by a mill that also produces flat products, whose uncharacteristically-high margins would offset the likely zero rolling margin for rebar.
CIS producers' indications are at $525-535/t fob, unworkable for traders. The lower end of the range is already unlikely to be available, one trader says. Consequently, with scrap prices rising, billet is priced at almost the same as Turkish rebar, which appears to be much slower to absorb the increases.
Billet booked today will be used for late-first-quarter/early-second-quarter rebar production. “Turkish rebar mills must be confident enough for their second quarter domestic and export rebar demand to be booking at these levels both in the import and domestic market, where prices have reached $540/t ex-works," a major trader notes.
Some rebar suppliers withdrew from the market on Tuesday with no firm offers given, despite relatively good demand which is nevertheless at prices below mills’ expectations.
Although growth in iron ore and scrap prices justifies the billet hikes when measured by traditionally accepted margins, only wire rod suppliers are able to pass these increases on to their buyers currently.
Rebar prices remaining almost in line with billet is causing significant concern to some re-rollers, which may end up with mills ceasing offering and producing rebar altogether for some time, participants suggest. This temporary supply constriction may stoke up price increases, although much wider measures are needed to stimulate rebar demand and its subsequent price rise.
Meanwhile, CIS billet suppliers are enjoying a high level of February-loading books and do not appear to be willing to reduce prices. There are very few offers in the market, traders say, with mills inviting bids, showing their confidence in the ongoing ascending dynamic.
Source:Kallanish
