The Black Sea billet market remained under pressure in mid-June as Russian exporters lowered offers by $10/t to $480-485/t FOB in an attempt to revive demand from Turkish buyers. However, the price reduction has so far failed to stimulate significant buying activity, with Turkish mills continuing to delay purchases amid expectations of further declines in billet and scrap prices. The recent easing of geopolitical tensions in the Middle East has also reduced the supply concerns that previously supported billet prices.
The weakening Turkish scrap market remains one of the key bearish drivers for billet. Lower scrap prices have reduced production costs for Turkish electric arc furnace producers, encouraging mills to postpone purchases in anticipation of even more competitive offers. At the same time, declining Chinese billet export prices have intensified competition in export markets, forcing Russian suppliers to adjust their pricing strategy to remain competitive.
Nevertheless, Russian producers have limited flexibility to implement deeper price cuts. A relatively strong rouble continues to pressure export margins, while firm domestic scrap prices keep production costs elevated. These factors have prevented exporters from offering aggressive discounts despite subdued demand.
Additional pressure is coming from the gradual recovery of Iranian billet exports. As major Iranian steelmakers return to the export market with new tenders, the availability of competitively priced material has increased, reducing the supply shortage that supported Black Sea billet prices earlier this year. Although uncertainty surrounding US-Iran negotiations continues to keep buyers cautious, improving Iranian export activity has contributed to a more balanced regional supply situation.
The weaker export market also reflects the challenging conditions facing Russia's domestic steel industry. Russian crude steel production declined by 2.5% year-on-year to 5.8 million tonnes in May, while output during January-May fell by 8.4% to 26.6 million tonnes, extending the downward trend seen since last year. The slowdown has affected the entire steel production chain, with finished steel, iron ore, coke, pig iron, and steel pipe production all recording significant year-on-year declines, highlighting persistent weakness in domestic industrial activity.
Weak construction activity, limited infrastructure investment, and high borrowing costs continue to suppress domestic steel consumption, forcing producers to rely more heavily on exports to maintain mill utilization. However, growing competition in international markets and softer demand from key importing countries have limited the effectiveness of this strategy. As a result, Russian mills remain caught between weakening domestic demand and increasingly competitive export markets.
Overall, the Black Sea billet market remains firmly buyer-driven. Weak finished steel demand in Türkiye, declining raw material prices, recovering Iranian exports, and deteriorating domestic fundamentals in Russia are all weighing on market sentiment. Unless Turkish mills resume active purchasing or raw material prices recover, Black Sea billet prices are expected to remain under downward pressure in the near term.
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