Posted on 06 May 2021
Black Sea billet export prices have reached new highs in the past week, but the growth is unlikely to stop here. With CIS sellers enjoying their traditional early May break and China ending its holiday on Wednesday, activity, although slightly down now, is expected to pick up, driven by vast swathes of existing and forecasted seasonal demand.
Only Turkish billet is currently loosely offered in the Black Sea, following a series of domestic sales late last and earlier this week, at up to $650/tonne ex-works. Turkish offer indications at $645-650/t fob Turkey could be short lived, Kallanish hears from market participants.
The renewed ascent of Turkish scrap import prices, which gained almost $30/t in the past week, albeit driven largely by flat steel producers, is affecting the billet market. Domestic billet offers are already heard at $670-680/t ex-works this week, with exports likely to follow.
Turkey's workable billet import price is around $640-650/t cfr, traders note, but there are no offers from the CIS at the moment, and traders' long positions are quite limited. The latter is on the back of frozen and, in some cases, tightened credit lines by banks to traders as prices of contracts are rising exponentially.
Some traders' credit lines are only allowing them to trade half of their traditional volumes, leaving out small- and medium-sized re-rollers in traditional African markets, traders concede.
But larger traders are also affected, with one of the world's largest trading firms recently losing 3% in credit lines, according to fellow traders. "Although the market is advancing, with less traders' positions there is less availability," one trader notes, adding that more direct large-volume sales are taking place to Latin America, China and the Arabian Peninsula.
But some small sales did take place to North Africa from the CIS at $643-648/t cfr, netting back to around $615-620/t fob Black Sea. There are currently no offers from CIS suppliers, but expectations are for a minimum $20/t increase when sellers return after a holiday next week with June-casting volumes. The prices they offer will largely depend on Turkish and Chinese demand at the time.
Source:Kallanish
