Posted on 31 May 2019
CIS billet offers at $445-450/tonne fob Black Sea remain too high for buyers leading to a noticeable lack of activity, further emphasised by the end of a month and a Ramadan lull.
The increase was on the back of mid-month unexpected move by Washington to reduce Section 232 duty on Turkish steel from 50% to 25% and to cancel Canadian and Mexican duties. Simultaneously - if not slightly preceding it – a rise in scrap bookings and rebar export prices in the Turkish market inspired CIS producers to raise their offers also. Apart from a few position deals by traders however, there were no Black Sea billet bookings at new prices, market participants tell Kallanish.
One sale to Tunisia of a medium-sized position lot at an equivalent price of around $426-430/t fob Black Sea was sold early this week, but other enquiries at approximately this level remained open. Tunisian buyers would be willing to negotiate CIS billet purchase at $450-455/t cfr, the same as Egypt, while Turkish buyers are putting in $440/t cfr enquiries to mills.
Some CIS mills may be open to booking at $440/t fob with firm bids, traders say, but other, large integrated mills, are waiting for Asian buyers to return after Ramadan and hold offers steady. Post-Ramadan buying is most likely to bring a surge of new bookings, as long as mills are ready to negotiate down, traders note. The latest bookings in southeast Asia of Russian material at $460-465/t cfr from the Russian Far East would still net back to $420-425/f fob for very large bookings.
The descending scrap and continuously stagnant rebar markets are also stifling any budding attempts at growth, sources note, and are fostering expectations of a slightly downward price correction or a flat market in June.
