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Kallanish Kallanish

Knowledge matters Knowledge matters

January, 23rd 2022

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JAN 13

Depressed rebar prices stifle GCC billet buying


Gulf Cooperation Council (GCC) billet market activity is being stifled by rebar prices, which offer producers very little profit margin, Kallanish notes.

In United Arab Emirates, re-rollers are quoting rebar at AED 2,420-2,435/tonne ($659-663) ex-works for January deliveries. This price is set because largest producer Emirates Steel rolled over for three consecutive months its rebar quote at AED 2,490/t ($678) ex-mill. And the general consensus is February prices will be the same.

Scrap price hikes in the global market due to a recovery in Turkish mills’ purchases in the last ten days are encouraging GCC billet producers not to lower their quotations.

In UAE, induction furnace commercial-grade billet is at $620/t ex-works, and electric arc furnace billet from a neighbouring country at $630-640/t delivered in UAE, for February shipments. These prices do not justify re-rolling cost. On the other hand, Iranian billet at $585/t cfr Sohar and Jebel Ali is more competitive in comparison to Indian-origin material at $665/t cfr and CIS billet hovering at $665-670/t cfr. The latter two equate to fob prices at $600-605/t and $600-610/t, respectively.

CIS-origin billet prices’ resistance from falling is attributed to boosted Egyptian demand since safeguard measures there were lifted in mid-November, as well as high energy costs. However, there is an expectation that export taxes on Russian billet, which were at $115/t, expired at the end of December. This may bring CIS-origin material to $580-590/t fob Black Sea levels, if not lower, sources observe. Softening freight prices for bulk vessels will further reduce prices of the material, which is desired at $625-635/t cfr GCC and lower.

In Saudi Arabia, billet producers are offering at $635-645/t ex-works, while unsolved logistics issue are preventing producers from offering cpt prices.

There is a silent agreement in the market not to talk about Iranian low-priced billet, but the material is finding buyers in some GCC member countries.

Burak Odabasi Turkey