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Kallanish Kallanish

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July, 4th 2020

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Kallanish Steel Weekly: Billet prices drift despite stable iron ore (Aug. 7, 2018)

CIS billet prices remained stable last week, but the market continues to be described by traders as “... drifting.” Since the end of July Black Sea export prices for billet have stabilised at $500/tonne fob, close to the annual lower-end reached in late January this year.

Historically billet prices are influenced mainly by scrap levels in Turkey, the country being one of the main buyers of CIS billet to be used as an input alternative in case scrap values are too high. Nevertheless billet production in the Black Sea is mainly carried out through the integrated route, therefore directly connected also to iron ore price movements. The current weakness in Turkish scrap values is therefore the main reason behind the reduction in billet prices. The firmness of iron ore prices in China also suggests that further big drops might not take place in the coming weeks.

The diverging trends involving scrap and iron ore (the two main raw materials for steelmaking) continued last week as scrap in Turkey remained stable at the lowest price registered this year. Iron ore meanwhile has continued to trade at above $66/t cfr Qingdao supported by the positive performance of the Chinese steel domestic market.