Situation in the CIS billet market is getting worse for exporters. Buying activity in Middle Eastern and North African countries is close to zero at the end of the month. Poor demand for finished long products cannot support semis prices either, leaving sellers no choice but to cut offers. Only Far Eastern suppliers have managed to hold their positions so far. Yet, since the rainy season in SE Asia is still affecting construction activity, situation in this market is expected to worsen as well.
Besides, Turkish exporters also keep reducing quotations (billet prices have lost $10/t, finished longs - $15-20/t in a week), hoping that foreign buyers (mainly from the Middle East) will start active purchases before Ramadan. At the same time, the latter prefer to wait for the prices to move down.
Thus, suppliers of CIS material have been forced to reduce prices to overseas customers, despite short supply of July billet and already closed order books for August deliveries of some producers. Yet, the price fight is still on: quotations of the material in the Azov-Black Sea ports have lost $5-20/t depending on producer in a week. The level quoted by sellers is nominal, since buyers bids are $15-20/t lower. Naturally, suppliers want to start negotiations at higher levels, but the prices situation is sure to develop under the buyer's scenario.
BMZ, which offered 6,000 t of July billet at $675/t FOB last week, managed to sell the material at a $5/t lower price. Yet, this deal is single and the amount shipped is small, so it does not reflect workable levels in the semis market.
Being the last to define July prices, Metalloinvest (OEMK) and Mechel (REMZ) has started offering with $660/t FOB, but they have received no response from buyers. Turkey being one of the main sales outlets for 150 mm billet with the prices for local material at $670-680/t EXW/FOB (excl. 18% VAT), sellers can count on deals at $660-665/t C&F ($645/t FOB). Nevertheless, the latter are not ready to make such reductions and hope to agree on higher prices during the talks.
Moreover, suppliers at the Black Sea ports are not considering SE Asia and Iran as alternative sales markets so far. Iranian customers are still inactive, and quotations of semis in SE Asia do not exceed $680/t C&F, which corresponds to $635-620/t FOB Black Sea, depending on the volume.
Suppliers are face difficulties in the Caspian region too: Iranian buyers are still in a wait-and-see mode referring to an unfavourable situation in the domestic longs market. However, as June comes to an end, exporters cannot delay sales of July semis output, so they have started business this week.
In particular, Casting (Kazakhstan) has been testing the market setting initial prices for square billet of July production at $665/t CPT Aktau (about $675/t FOB Aktau), $25/t up than in late May. However, this offer has obviously failed to attract Iranian customers, so next week the producer will have to slow down. Quotations of Kazakh billet are expected to drop by at least $15/t.
At the same time, offers of July casting from Ural Steel have come at $660-665/t FOB Astrakhan, but no deals have been reported. Having realized this week will bring no luck, sellers of the material from Volga-FEST and REMZ have decided to take a break till the situation becomes clearer.
Notably, the suppliers hope the revaluation of Iranian currency will support domestic prices for finished longs, and customers will resume business amid poor inventories in the country.
The Far Eastern market has not seen significant price changes over the week. EvrazHolding has closed sales of July square billet at $650-660/t FOB Nakhodka, and it is making no new offers so far. The supplier’s initial prices for August production are expected to stay the same.
Regional sellers of billet from South Korea and Malaysia keep pushing prices up, trying to hit the level of $680/t C&F, which may support Russian prices. However, given Japanese exporters continue selling semis at dumping prices ($660-665/t C&F) and offers from Australia to Vietnam are coming at $650/t C&F, the competition remains strong. Moreover, as demand for square billet is slackening in SE Asia due to the rainy season, exporters will hardly follow the uptrend for a long time.
( Source: www.metalexpert-group.com )