Commodities 2021: Black Sea billet market firm to start year, outlook positive - S&P Global

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New York — The Black Sea billet market entered 2021 with the highest prices in nine years. And while trading has so far been slow due to a holiday period in the CIS, the price expectations for the first quarter and further out shared by market participants remained positive.

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The ongoing tightness in scrap supply from the US and Europe is expected to support billet prices, a trader said. He suspected a moderate correction, between $20-$30/mt, in billet prices is possible sometime toward the the end of Q1, but a major price plunge is unlikely. Another trader also predicted an eventual dip in pricing, but he was confident that the gains from November and December last year were mostly safe.

The first indications of new offers for March shipments were already up from last December quotations, to $610-$620/mt FOB Black Sea, trade sources reported. One trader suspected the balance between buyers and sellers was around $605/mt FOB Black Sea. However, no bookings at similar levels were confirmed in the market.

The last S&P Global Platts assessment was $590/mt FOB Black Sea on Jan. 7, which was significantly higher than just above $400/mt FOB at the same time a year ago. The last time the market entered a new year at a higher price level than now was in 2012, when it was $600/mt FOB.

Prices surge but average still low

Last year saw a steep and continuous price upswing starting in early April and lasting until now.

Overall, the prices rallied around $260/mt, with the particularly steep upward curve starting in mid-October. The last 10 weeks of 2020 saw around $180/mt ascend in the Black Sea spot billet prices.

The average price level for full-year 2020, at $398/mt FOB Black Sea, was down from the average of $407/mt in 2019, $489/mt in 2018 and $435/mt in 2017. Only 2015 and 2016 had a lower annual average price level than 2020 in the last 10 years.

China emerges as a major importer

Much of the billet price strength since April 2020 was owed to the emergence of China as an importer of vast quantities of semi products including billet. CIS mill responded with increased export allocation of semi products, particularly in the third and fourth quarter. This helped to offset somewhat lower demand from North Africa and the Middle East. At the same time, a few Latin American counties showed markedly stronger demand for billet imports, which was supplied by CIS mills.

Russia's decision to curb scrap export for six months this year may also lead to more availability of billet in the spot market and at the same time more demand, particularly from Turkey. Despite Russian Antimonopoly Service recommendations to also impose export duties on billet at 13% (minimum Eur60/mt), the country's Ministry of Industry and Trade decided to limit only scrap exports.

Turkey is expected to remain the key destination for CIS semi products exports. Russia shipped 1.7 million mt of semis to Turkey January-October last year, relatively flat on year, while exports of semis from Ukraine rose to 965,000 mt, more than double on year. Turkish imports of semi products were 83% billet.

The Link Lonk


January 08, 2021 at 02:30AM
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Commodities 2021: Black Sea billet market firm to start year, outlook positive - S&P Global

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