Steel billet prices

London (Platts)--26Sep2011/224 pm EDT/1824 GMT

Decreasing export prices for steel billets shipped out of the Black Sea gathered pace Monday with $20/mt wiped off the Platts assessment as traders negotiated lower prices with supplying mills in Ukraine for October delivery.

Traders and mills with unsold positions for loading in October could see no premium for prompt material as buyers held off from bidding firm in the current market or November supply.

Platts reduced its Black Sea billet assessment by $20/mt to $652.50/mt FOB as a $640-680/mt price range was heard from mills and traders. There was a far greater likelihood of trade activity at the lower end of the range following softening global financial markets.

The Platts Black Sea billet assessment fell from a peak so far this year of $682.50/mt FOB last seen September 15. October supplies said to be tied up with traders and end-users have seen a sudden unwinding and the backwardation with November collapsed.

One Russian supplier said to normally only sell direct to users and not to traders, is offering widely in the market at $650/mt FOB, but no one is buying, said a trading source, based on information from the group's Ukraine office. Other offers available are at $670/mt FOB, the trader said.

Some mills in the region however did not deem $655-660/mt FOB achievable and would take bids for November on this basis.

MARKET 'LONG' HAMPERS BIDS

A trader heard $650-660/mt FOB for November shipment on offer, and stated $650/mt was the maximum bid level. The source would not pay more for offers with October laycans, "as the market is long." Turkish billet offers are holding out for October, but these prices are unlikely to be met, the trader said.

The drop in prices may lead mills to slash output in response to reducing demand in the long steel complex, rather than let the correction extend much farther.

A source at a large international trader said offers for October production are now down to $645-655/mt FOB Ukraine from one mill for 10,000 mt.

He said there were a number of buyers reneging on contracts to buy, and said it could be that lower prices are being seen as a result of mills and traders having to find new business.

"They didn't accept $655/mt FOB bids last week. Well now everything is $10 lower."

REBAR OFFERS DROP IN TURKEY, UAE

Rebar markets heard of a decrease in Turkish export offers to $710/mt FOB, from $715-720/mt FOB last week.

At Monday's IREPAS international rebar exporters' group meeting in St. Petersburg, sentiment was bearish. The UAE's integrated producer Emirates Steel was said to have reduced its prices for October production sales by around $20/mt.

Platts Turkish export rebar assessment fell $5 to $705/mt FOB.

In the meantime, ferrous scrap price levels were said to be holding up, but with no deals heard done and pressure admittedly on the downside. European suppliers want to sell HMS I/II (80/20 blend) at $450/mt CFR Turkey, and with the euro falling the price can more easily come down in dollar terms, said a Benelux-based supplier. US prices for HMS 80/20 were said to hold at around the last trades, at about $470/mt CFR Turkey, scrap traders said.

Platts regional scrap assessment fell $5 to $467/mt CFR Turkish ports to reflect a weaker buying outlook from Turkish mills.

The A3 scrap assessment fell by $3 to $435/mt FOB Black Sea on a likely increase in material available should export demand fall and capacity be cut at regional mills. European scrap prices held at $417.50 FOB Rotterdam.

While the supplier trader said that "scrap is in a delicate balance," the sentiment in billet and rebar would indicate prices of the raw material are under pressure to lower and ensure the metal spread is maintained.

"Scrap is still steady.. what are the Turkish [scrap buyers] going to do, they would need the price to fall to $440/mt CFR to maintain margins," commented a billet trader.