Despite increasingly concerned sentiment of billet market operators, steelmakers keep insisting on another increase in prices. But only suppliers of Azov-Black Sea region have actually implemented the rise in mid-January, while the Caspian and Far Eastern markets have remained silent.
Steelmakers hope they will be able to raise prices further while filling January order books, or even February ones this month in some cases. Mills are confident about the trend to be long-lived due to rapidly rising quotations for raw materials, scrap in particular, and current limited supply of their products.
Only DEMZ's (“Mechel”) and Metinvest International S.A.'s square billet is offered from ports of Azov and Black Sea. It is priced at $650-680/t FOB Azov/Black Sea. As previously reported, in the second half of last week, the producers were quoting their square billet at $650/t FOB, and in the first one – even lower, at $630/t. Arcelor Mittal Kryvyi Rih sold a half of its February production, including one or more batches early this week, and took a break. As previously reported, BMZ closed sales of its material on Monday, selling 5,000 tonnes of it at $655/t FOB Odessa. Metalloinvest and Novorossmetall are just evaluating the situation now, probably intending to start selling their February production of billet in the second half of January and believing that the boom in the raw material market will reach its peak by that time.
The latest bookings of square billet to be produced in February have been reported at $650-655/t FOB. At the moment, there may be some offers at these levels in the market still, though it seems like they are becoming overdue. Moreover, some producers believe, the price of $700/t FOB for square billet will not be that shocking soon. However, traders consider their plans unrealistic, considering that the level $680/t FOB is already regarded as too high. In spite of optimistic sentiments about cost of scrap, increasing by another $20/t by February, the maximum transaction prices steelmakers may expect to reach will be $670/t FOB taking into account re-rolling.
Traders are unlikely to keep purchasing the material in long position. Galloping growth of prices for semis has been mostly caused by continuous increase in raw material expenses, in scrap ones especially. However, currently, market participants estimate the prices for scrap are unlikely to keep on growing. The situation is also aggravated by rumours about a decrease in quotations of scrap and finished longs in Turkey, appearing in the market by the end of the week.
Currently, offers of February production in the Caspian Sea region are also limited: only prices for square billet from REMZ have been reported at $660-670/t FOB. However, in view of weak demand from construction industry and imposed governmental regulations, aimed at reducing pace of inflation, re-rollers have to cut offers for rebar, which hardly encourages them to buy square billet actively. Thus, traders, which have purchased enough square billet to work in the future, can not accept such high levels, so they have started bidding to sellers at about $640/t FOB. Offers of square billet to be produced in February from Kasting (Kazakhstan) and Metalloinvest have not come to the market so far, but Iranian traders expect prices will be set at $650/t FOB. There is a shortage of semis in Far Eastern market now due to growing demand from Asian buyers. The total February output of EvrazHolding has already been booked amid high number of orders left from the previous month. Reportedly, large trading companies have quoted billet at an average of $635/t FOB ($660/t C&F) this week. Market participants report Russia’s Amurmetal is currently collecting bids to form prices for February output of semis. Taking into account the fact that only Thai and Vietnamese sellers (the latter re-export products) among the rest in the region are active in the market and are offering billet at $680/t C&F on average, Amurmetal is expected to have all chances to sell its material at $635/t FOB ($660/t C&F).
(Source: www.metalexpert-group.com )