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Kallanish Kallanish

Knowledge matters Knowledge matters

January, 23rd 2022

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JAN 13
13:26

Depressed rebar prices stifle GCC billet buying

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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