Posted on 22 Sep 2021
The Black Sea billet has becalmed following several sales of large lots by CIS integrated mills to China, selling out of October-casting volumes.
But traders expect more volumes will be offered and sold, as China's drive to stock up on billet continues. There is concern, however, over how the world's largest real estate investor Evergrande's expected interest rate payment failure will affect the futures market, market participants tell Kallanish.
Technically, with output on the decrease, China's buying interest is set to continue ticking over. Lowering iron ore prices, which dropped under $100/tonne cfr on Tuesday (see separate article), were not a concern to traders, who cited buying interest as a major driver of prices into China right now. But more volatility is in sight, they admit, amid difficulties with intensifying cashflow, seasonal factors and political concerns.
With October-casting volumes produced by large integrated mills fully closed, there are offers from a scrap-based Russian mill at $590-600/t fob, in line with China sales netbacks. However, demand is weak in all other regions, including Turkey. Offers at $635-640/t cfr Turkey are being rejected by Turkish re-rollers, who are firmly on the fence in expectation of November scrap bookings – expected to start next week – bringing more clarity to Turkish costs.
Scrap prices are perceived as generally stable, at around $440/t cfr Turkey for premium HMS 1/2 80:20, with seasonality supporting stable or even higher prices, sources say.
Russian large integrated billet suppliers are also expected to start navigating fourth-quarter sales in terms of ferrous export duties, which are not expected to be prolonged – for now.
Having sold out of November shipments, December-shipment volumes may be very small or non-existent due to maintenances and worsening weather, delaying shipments to January instead, and therefore escaping the duty. By that time, de-bottlenecking in China's export routes is expected to intensify, enabling shorter unloading times, traders confirm.
Source:Kallanish
