Posted on 08 Apr 2019
Turkish billet exporters are staying bullish, maintaining offers in the $450-460/tonne fob Turkey range. There is too much competition however from European suppliers in their traditional markets and this could lead to lower prices, traders tell Kallanish.
Competition from European mills in Northern Africa is intense, with competing European offers at €390-410/t ($437-460/t) cfr, depending on the supplier, coming from "… all around Europe, not just South," sources say. This range encompasses the range of offers from both CIS and Turkish suppliers, and is highly compatible as Turkey and Europe export to North African countries duty-free, traders note.
Algeria and Egypt are looking to book at a maximum of $460/t cfr, Morocco at €415/t cfr and Tunisia "… may consider offers at $455/t cfr," according to traders working with the region. With bids at these levels, there its likely to be a stalemate for a while, until Turkish mills have better scrap availability. Opinions are split however as to whether scrap values will reduce significantly, propped up as they are by strong iron ore prices.
The Turkish mills' success in managing the scrap to billet ratio sustainably will depend on whether new scrap deals will be made at the targeted $300-310/t cfr range, sources say. Such deals are expected to be negotiated at the bi-annual industry event taking place in Barcelona early next week. But "… scrap demand is good and its supporting current price levels - scrap is relatively cheaper than pig iron and is used more in charges," a seasoned market observer notes.
Market participants cite that there is "… too much negative news" for the market to strengthen. They refer to weaker-than-expected demand for finished products in major steel consuming regions despite the high season, and continuously increasing competition amidst growing safeguarding. With Ramadan also approaching, many traders reckon that the end of the active restocking phase of this construction season may come earlier than June, depressing an already soft market further.
