Posted on 25 Jun 2019
Turkish billet exporters returned to the market last week after a three-week hiatus, with considerably lower offers, as was expected by market participants.
Following a round of relatively-low-in-volume rebar sales post Eid, mills at first started offering billet at around $10/tonne below the target price of around $445/t fob two weeks ago. They then reduced offers further to around $420/t fob last week, as input costs continued to ease amid softening scrap prices. Very few small-tonnage sales were registered last week at this price, snapped up for their short lead times, sources say.
Turkish mills' billet price reductions are in line with general softening in the market and the subsequent rise in competition offers from various sources, including the CIS. The latter is better-placed to be more flexible with offers due to lower output costs, as all major suppliers are either vertically integrated or buy scrap locally. Some CIS mills have already concluded sales at around $410/t fob and "…will reduce offers further if that will secure a sale," one trader says.
But Turkish mills' predicament is largely pegged by extremely low demand and competition from the very regions they would be selling to. In the Gulf Cooperation Council there are offers of billet at around $430/t fob but, with a view to adjust the price to market levels, some North African countries are also offering small to medium sized lots. Southern and northern European mills are also keen to sell. In addition, a very large Latin American tonnage is available at around $410/t fob – a workable price in Southeast Asia, although buyers may be repelled by long lead-times. The tonnage is for August shipment.
As maintenance season fast approaches, output cuts look to be deepening, in optimistic anticipation of a rebound in September, sources note to Kallanish.
