Posted on 20 Nov 2018
A bearish mood returned to the CIS billet export market last week after a few sales the previous week failed to kick start the weakening market, Kallanish observes.
Mills' billet offer indications slipped $10/tonne to around $470/t fob Black Sea, with Turkish offers also down slightly. One Turkish mill was offering 150mm cross section material with just two weeks' lead time at $470/t fob and some traders reckoned 125-130mm billet could be booked at around $475/t fob, down $5/t on-week.
Bids were largely tabled by traders, at a maximum of $450/t fob Black Sea, with some traders claiming this level was already too high. Considering how quickly the apparent revival has petered out, one trader said last week he would not pay anything above $425/t fob for billet.
A combination of traditional and accidental factors is behind the ongoing descent of Black Sea billet prices, with fewer market participants expecting recovery before the spring round of restocking begins. Despite the relative price strength and apparent shortage of scrap, there is little support for long finished product prices, which are moving sideways, amid continuously weak demand, forcing mills to reduce output and hence buy less feedstock.
The rebar market’s lack of strength has been further exacerbated by weaker Chinese rebar market performance last week in the wake of the country's record-high October output volumes. This, coupled with waning demand, saw talk of Chinese overcapacity resurface.
Turkey's trade restrictions at home and abroad continue to weigh on the CIS billet export market. Those markets still with demand have enough alternatives to choose from, and thus achieve a minimum price, market participants say. With December-casting volumes remaining largely unsold, it is likely that prices will take another dip before the new year, they opine.
