Middle East Steel Mills Swap Billet for Scrap to Maintain Profits

Over the past month, scrap metal price levels have risen by $ 30-35 per tonne, reaching $ 375-380 per tonne CFR level. At the same time, manufacturers of long products say that this upward price change is difficult to convey to the prices of their finished product.

Rebar price levels broke through at $ 565-570 per ton. In fact, factories report that it is becoming more and more difficult for them to execute transactions at these levels. Therefore, the difference in price between scrap and the final product will be narrowed, thus lowering the profitability of production.

In this case, billets, currently at $ 495-500 per tonne FOB, enable factories to maintain margins by reducing the price of rebar by some $ 10 per tonne at a price level of $ 550-555 per tonne FOB, making it possible to conclude orders. Any correction in billet price levels is expected to only improve for the factories, increasing their interest in billets, moving away from scrap.

At the same time, the coming week should clarify, undoubtedly, the price levels of finished products will improve in the conditions of warming weather. On the other hand, a decline in scrap price levels, if the levels of billets are not able to pick up even more, can significantly change the dynamics and force producers to turn to scrap metal again.