Posted on 01 Sep 2022
The Black Sea billet export market is anticipating new deals after weeks of relative stagnation. Amid growing long product mills' output cuts in Europe, expectations are rising for increased imports of Turkish-origin material, and the possibility of subsequent higher demand for Russian billet in Turkey.
But European demand, stoked by mill closures on ever-rising power costs pushing production costs higher (see Kallanish passim), can also be satisfied by now abundant Asian supply, traders say. Imports of Taiwanese, Thai, Philippine, Indonesian, Vietnamese and Indian billet are expected to start trickling into Europe, in addition to Gulf Cooperation Council material.
Current offers of Asian billet at $540-560/tonne fob and GCC billet are in line with Turkish prices of $600-610/t fob. The latter is more preferable for Europe due to lower freight rates. Traders note, however, that freight rates are declining, albeit current shipments from Indonesia, for instance, are still well in excess of $100/t. But Turkish billet has already started finding its way to Europe, with southern European producers paying around $605/t fob just over a week ago, and more sales underway, traders say.
Russian billet is offered at $500-520/t fob Black Sea, depending on producer, but bids in Turkey still do not exceed $510/t cfr, in line with Iranian and eastern Ukrainian material prices, concluded in the last ten days. One Marmara producer was heard paying $540/t cfr for Russian billet last week. Sales are low, as Russian mills are not pushing aggressively, as they have satisfactory sales levels and their own high production costs to consider.
There is a sentiment of stability in prices in sales to Tunisia, Turkey and Egypt, despite the latter not being able to buy anymore until the payment backlog of the last three months is cleared, traders note. Tunisia was also paying $540-550/t cfr for Russian billet in the past fortnight. Egyptian interest is at the $550-560/t cfr level.
Asian demand for Russian billet has dived, amid ongoing weakness in the region, and China is also out of the market amid ongoing production restrictions due to power distribution, Covid lockdowns and high stocks. Russian billet offers in the Far East have not changed dramatically from the beginning of August, remaining at around $500/t fob, capped by high production costs.
Source:Kallanish
