Posted on 04 Aug 2022
Low demand and decreasing Iranian billet prices are pulling down local billet prices in the Gulf Cooperation Council market, Kallanish observes.
This week, Iranian merchant billet offers, delivered to buyer's yard in Oman and United Arab Emirates, dropped to $500/tonne and below from last week's $525-530/t for August deliveries. Oman's electric arc furnace route integrated mill's wire-rod grade billet offer has inched down to $535-540/t fob Oman.
Last week, UAE and Omani mills were offering at $560/t fob, while Bahrain-origin material was offered at $560/t cfr UAE, for August deliveries. A re-roller in UAE was heard booking 20,000t of local induction furnace billet at around $555/t delivered, for prompt shipment.
This week in UAE, local induction furnace route merchant billet producers are resisting going below $580-590/t ex-mill due to high scrap costs. Local HMS 80:20 grade scrap was recently heard booked at AED 1,760/t ($480) delivered to buyer's yard. Taking into account the conversion cost of scrap to billet in UAE, reported at $100-120/t, billet cost is $580-600/t ex-mill. However, due to cash flow bottlenecks and sales pressure, induction furnace merchant billet producers may compromise $10-30/t for large volumes of 15,000-20,000t.
"There is a scrap scarcity in UAE. That's why local scrap prices remain high and do not align with the falling global trend,” explains a local source.
This week in Saudi Arabia, local induction furnace billet prices in Dammam and Riyadh are at around SAR 2,150/t ($573) ex-mill, and in Jeddah at SAR 2,080-2,100/t ex-mill. "Demand is not adequate but slightly improving,” says a merchant billet producer. Saudi billet producers are eyeing the upcoming 30,000-35,000t hot-briquetted iron tender being launched by Lisco in Libya on 10 August.
Ex-Indonesia merchant billet is heard offered for a substantial tonnage at $570-580/t cfr Jeddah for end-August shipment.
At the beginning of this week, a trader concluded a deal for a 5,000t billet parcel sourcing from Russia destined to Egypt at $580/t cfr Egypt for August shipment. Iran's sole blast furnace route mill concluded a 30,000t billet deal at $460-465/t fob, destined to the Far East. The expected result of recent billet tenders in Iran is at $450/t fob and below.
All above given prices exclude VAT and duty tax, if applicable.
Source:Kallanish
