Reuters reported that Black Sea billet edged down this week as demand remained depressed and sentiment was subdued by ongoing political tensions in North Africa and the Middle East and by the worsening nuclear crisis in Japan.
Since violence in the Middle East and North Africa escalated about a month ago construction and investment in the area have slowed, dragging down billet demand. Billet prices have fallen slowly but relentlessly.
Traders were quoting Black Sea billet at USD 585 per tonne to USD 605 per tonne FOB Russia and Ukraine this week down from USD 590 per tonne to USD 610 per tonne FOB last week.
UK based billet trader said that "I think there is still some negativity in the market. I certainly wouldn''t expect prices to stabilize. It''s all on shaky legs. Buyers were now bidding for billet at USD 580 per tonne to USD 585 per tonne FOB CIS and would not accept higher prices.”
A source at a Turkish producer said that small volumes of Turkish billet sold at USD 600 per tonne to USD 610 per tonne FOB down from offers at USD 620 per tonne to USD 630 per tonne FOB two weeks ago. Turkish billet export volumes fell by over 50% in March from February, representative of the crisis affecting the steel market at the moment. Markets were feeling the impact of fast moving world events.
He said that you think that the market is getting better and then there is a war in Libya. Then you think that the market is getting better again and there is an earthquake in Japan. Turkish rebar sold at USD 645 per tonne to USD 660 per tonne FOB down from USD 650 per tonne to USD 660 per tonne FOB last week. However wire rod a steel long product used in construction and other sectors such as agriculture was performing better than other long products, and sale prices were little changed from last week at USD 700 to USD 710 FOB on firm demand.
A source at a third steelmaker said that wire rod is sold out until mid May. At this point we should be sold out until June for everything but we are not. Billet and rebar were performing worse than expected. I am not convinced prices are going up. Besides unpredictable events such as wars and natural disasters, which are currently weakening demand for billet and rebar, the steel long products industry is facing some structural problems. Many of those emerging countries in North Africa and the Middle East which have been major importers of Turkish, CIS and European steel long products to feed their construction industry are now developing their own steel industries.
A second steel trader said that the problem is overproduction. By 2020 the Middle Eastand North Africa will be self sufficient and Turkey will be in trouble. At the end some mills will have to shut down. To overcome these problems some Turkish mills are switching from producing steel long products mainly used in the construction industry to steel flat products used in the automotive and manufacturing sectors.
As Turkish steel flat products market is currently undersupplied and the country largely relies on imports, domestic steel producers are hoping to fill this hole. Some others are instead looking at new exports markets for their long products.
The source at the third producer said that we have been trying to find new markets not to be so dependent on the Middle East anymore and this is now paying off. They have been focusing on sales to South America, smaller in volumes but more profitable.
( Source: www.steelguru.com )