CIS billet exporters are disappointed seeing the situation in the export markets is getting dimmer. Demand for semis in the MENA region has not strengthened enough to support their upward policy. Thus, the sellers have faced buyer opposition this week. Billet suppliers in the Caspian region still insist on higher prices, though buying activity of Iranian consumers is rather slack. In Far Eastern market demand remains poor; yet, producers manage to keep prices from falling, citing limited supply.
Earlier this week suppliers from the Azov-Black Sea ports were highly successful: July production was booked to the Middle East at $680-685/t FOB (Electrostal was selling at $670/t FOB Mariupol) and buying interest was strong. BMZ, inspired by a success of its counterparts, tabled offers of July casting at $697/t FOB on June 6. Other exporters considered their offers too low and refused to sell the material at $675-680/t FOB by the middle of the week, aiming to reach $685-690/t FOB.
Yet, these moves have made buyers switch to a wait-and-see mode. BMZ, in turn, has responded very fast and put offers down by $17/t. Still, it confused customers even more and made some sellers leave the market. Semis from BMZ are expected to shed at least $5/t.
The outlook for Azov-Black Sea region is still vague: traders think this is the time when quotations will either move down or continue rising. A major part of July billet being already booked up and some buyers still showing interest in semis, producers have no reason to be in a rush and may temporarily withdraw from the market. After stirring up buyers, sellers have a chance not only to keep prices from falling, but also to continue pushing them up, but less steeply.
However, Turkish market is getting slower, which means customers in this country will not be able to buy at high prices. Also, in case export quotations of Turkish semis go down, CIS sellers will have to make reductions in order to stay competitive. Most market players believe a gain in prices for square billet has been rather artificial. Thus, in view of seasonal downturn in demand for finished longs, mills have no choice but to cut offers. Moreover, quotations of billet in the LME have headed down (-$13-15/t for cash contracts in a week).
Situation in the Caspian region is still unclear: CIS exporters plan to keep pushing prices up, while Iranian buyers are forced to resist the trend.
Iranian market remains a puzzle to market players: demand for semis from local re-rollers is still high, but they are not ready to accept current prices. Previously, Iranian mills purchased billet mainly in the secondary market; yet, after devaluation of the national currency (11% in one day), import products have become too expensive to them, as well as to traders.
CIS exporters stay in a wait-and-see mode, planning to start offering July output by mid-June. This week the market saw offers only of Volga-FEST and REMZ semis at $675-680/t FOB (+$30-35/t in a month).
Yet, Iranian customers have rejected suppliers’ attempt to raise billet prices pointing to increased quotations in Azov-Black Sea region and Turkey. Buyers are waiting for reductions from sellers, since demand in many sales outlets traditionally falls by end-June. It is expected that amid increased domestic quotations of longs and semis in Iran local customers will be able to get down to imports.
Demand for semis is still rather poor in SE Asia; however, exporters of Russian billet have managed to make buyers sign deals. Asian customers have tried to knock billet prices down, citing a seasonal slowdown, but suppliers are able to hold them amid short supply.
In particular, market players say Evraz Holding has sold a major part of July billet at $645-650/t FOB, which corresponds to the levels of recent transactions for June material.
Still, square billet prices may slide, since Asian buyers keep trying to get discounts, bidding by $5-10/t lower than initial offers.
( Source: www.metalexpert-group.com )