Russian billet demand wanes in Turkey, prices rise
Russian billet export prices have increased, following the uptrend in scrap values in Turkey. However, a decline has been registered in Turkish demand for Russian-origin billet, weighing on prices, market participants inform Kallanish.
Firstly, Kardemir, a major Turkish billet supplier, is anticipated to increase its prices for domestic buyers to $555-560/tonne ex-works. The Turkish market has been waiting for it to open sales in order to guide on bid levels for Russia-origin billet.
Secondly, EU sanctions are exerting pressure on demand, as opting for Russian-origin billet locks Turkish finished steel sales out of the EU market.
Also, the generally low export demand for merchant bar, a major segment for imported billet purchasing in Turkey, has contributed to the situation. Merchant bar demand was reported remaining rather weak, keeping Russian-origin billet prices at around $525/t cfr Turkey, whereas Turkish rebar producers were expected to be able to pay approximately $530/t cfr in Turkey’s Black Sea region, according to a supply-side source.
Furthermore, the year-end poses another challenge for Russian billet demand, with Turkish suppliers aiming for increased liquidity on their books and therefore reduced purchasing.
Adverse weather conditions in Russian Black Sea ports have meanwhile hindered prompt-shipment material arrivals before year-end. Decision-making for January-shipment purchases has subsequently been delayed.
Payment terms were also named among the factors. Buyers of Algeria-, Ukraine-, and Malaysia-origin billet opt for letters of credit with 180-day terms, while buyers of Russian-origin have to make cash on discharge payment, a supplier says. However, the non-Russian origins were trading at higher prices, with a recent Algeria-origin deal heard at $555/t cfr Turkey.
A cheap option, Iran, is quoting at $505-507/t dap supplied by truck, also adding pressure on Russian prices in certain areas.
Major Russian billet producers were offering billet at $500-520/t fob Black Sea, unchanged from a week earlier, and despite falling scrap pricing domestically in Russia.
At the same time, Russian billet for January shipment was available at $517-519/t cfr Turkish Black Sea, $523/t cfr Izmir and $525-528/t cfr Iskenderun, with cash payment against discharge. This particular supplier maintained prices in order to retain market share.
Two trading sources, one from Russia, another from Turkey, assessed the market at $525-535/t cfr Turkey.
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