Russian billet market in decline

The Black Sea billet market is entering a potential downtrend as external pressures and changing market dynamics force Russian sellers to reconsider their pricing strategies. After attempting to hold firm on their offers, Russian suppliers are now adjusting their prices in response to mounting market pressures.

Despite early efforts to maintain higher price levels, several factors are influencing Russian billet exporters to lower their offers. Chief among these is the softening of the Chinese semis market, where declining offers from Chinese suppliers have exerted downward pressure on global prices. Furthermore, volatility in the Turkish scrap market has caused buyers to push back on previously accepted price levels, resulting in lower bids.

As of fourth week of October, Russian billet exporters are offering their material for November-December shipments at $495-505/t FOB Black Sea, compared to $490-500/t a week earlier. Although the price range hasn't shifted dramatically, there are increasing signs that discounts are becoming available. Some producers, initially offering around $505/t FOB, have dropped their offers by approximately $10/t, largely in response to falling scrap prices in Türkiye.

Türkiye, a key market for Russian billets, has seen a wider range of offers from Russian suppliers. Billet is now being offered at $495-520/t CFR, with the lower end of the range typically associated with material from Donbas. However, the higher end of this range—up to $520/t CFR—is becoming less sustainable as buyers expect further price drops. Reports of small deals at $505/t CFR have circulated, but with limited concrete details, it seems the market is still in a wait-and-see mode, anticipating further reductions.

Turkish buyers have notably revised their purchasing strategies, with initial discussions around $500-505/t CFR at the start of the week now considered too high. Traders suggest that prices below $500/t CFR are becoming the new norm, particularly if Kardemir, a key domestic supplier, reduces its semis offers in upcoming sales.

The overall sentiment in the market suggests that Russian billet exporters are navigating a complex environment where price concessions are becoming necessary. With key buyers like Türkiye and Egypt holding out for lower prices and Chinese competitors undercutting the market, the outlook for Russian billet suppliers remains uncertain. If scrap prices continue to drop and domestic offers from countries like Türkiye fall, it’s likely that we will see further downward adjustments in billet prices in the coming weeks.
While the Russian billet market is still trying to hold on to the $495-505/t FOB range, the competitive landscape is shifting rapidly. Market participants should remain vigilant as the potential for a more significant downtrend looms.