Long product prices at Black Sea have shown resilience over the last week and the moot issue is sustainability of this climb.
The prime mover behind this has been a rally of USD 30 per tonne to USD 40 per tonne in the last fortnight. The mainstay of this rally had been opening of Turkish buying after hibernating for 2 months. The buying compulsion was borne out depleting stock with mills on one hand and an anticipation of bottoming out giving the apposite spur for buying.
Prices of scrap crept from levels of USD 280 per tonne to USD 290 per tonne to USD 320 per tonne to USD 330 per tonne CNF Turkish ports, although offers have been moving around USD 340 per tonne to USD 350 per tonne levels without any transactions.
The push has certainly had an effect on the billet prices which seems to have moved up by USD 25 per tonne after a long drought. The current levels prevailing are at USD 445 per tonne to USD 465 per tonne FOB Black Sea.
The rebar prices have also appreciated by USD 10 per tonne touching levels of USD 510 per tonne to USD 540 per tonne FOB Turkish port and USD 480 per tonne to USD 510 per tonne FOB Black Sea.
The fundamental reason has been cost push with scrap price moving up trickling into a delta growth in billet and rebar prices. The demand still eluding it might yet again turn out to be a red herring.
The bidding/buying activity certainly picked up at the beginning of last week, only to die out at the end of it, as news of possible weakening of scrap started to spread.
Currently the availability is pretentiously tight with July and August almost closed and mills trying to push through levels of USD 460 per tonne to USD 470 per tonne FOB Black Sea.
However the some signs of cracks in the scrap prices appearing in Middle East and South East Asia is enough to send chill down the spine .Moreover with Ramadan starting on 11 August and European producers traditionally scaling down for one of the quietest months of the year, there is a faint promise of activity in the next two weeks, as buyers are expected to stock up.