The Black Sea harvesting market expects growth

The Black Sea billets export market is expecting new deals after several weeks of relative stagnation. Against the background of a growing decline in the production of long products in Europe, expectations are growing for an increase in imports of material of Turkish origin and the possibility of a subsequent increase in demand for Russian billets in Turkey.

But European demand, spurred on by plant closures due to ever-rising electricity prices, driving up production costs (see Kallanish passim), could also be met by the current plentiful Asian supply, traders say. Imports of Taiwanese, Thai, Filipino, Indonesian, Vietnamese and Indian blanks are expected to begin flowing into Europe in addition to GCC materials.

Current offers of Asian billets at $540-560/t FOB and GCC billets are in line with Turkish prices of $600-610/t FOB. The latter is more preferable for Europe due to lower freight rates. Traders note, however, that freight rates are falling, although current shipments from, for example, Indonesia are still well above $100/t. But Turkish billet has already begun to flow to Europe: a little over a week ago, South European producers were paying about $605 per tonne fob, and, according to traders, sales continue.

Russian billet is offered at $500-520/t fob Black Sea, depending on producer, but offers in Turkey are still below $510/t cfr, in line with Iranian and eastern Ukraine crude prices negotiated over the past ten days. Last week, one producer, Marmara, paid $540/t for Russian billets. Sales are low as Russian mills are not aggressive as they have satisfactory sales levels and their own high production costs to consider.

Traders note that there is a sense of price stability when selling to Tunisia, Turkey and Egypt, despite the fact that the latter will not be able to buy more until the last three months of payments are paid. Tunisia has also been paying $540-550/t for Russian cuts in the last two weeks. Egypt's interest is at the level of $550-560/t CFR.

Demand for Russian billets in Asia fell due to continued weakness in the region, and China also pulled out of the market due to continued production constraints due to power distribution, Covid restrictions and high inventories. Offers of Russian billets in the Far East have not changed significantly since the beginning of August, remaining at around $500/t fob, limited by high production costs.