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CIS billet availability will increase if Iran can't buy - 30 January 2012

The availability of billet out of the Black Sea from CIS producers may increase considerably in the next several weeks, as Iran’s ability to trade is curbed further by the lack of foreign currency reserves and intensifying sanctions, market sources tell Steel Business Briefing.

Whilst some producer-linked sources say the situation hasn't changed in the last few weeks, the majority of traders and producers selling to Iran say it is getting worse. "No new deals are being made – sellers are finalising the old deals," one trader says.

"In a good month, Iran used to import up to 500,000 tonnes/month of semis and finished products from Russia and Kazakhstan, but this slumped to around 40,000 t/m in the last few months," a major trader says. Recent billet price weakness on the Black Sea was connected to the fact that Iran was buying very little, and it is likely to weaken more, as now Iran is not buying at all," he says.

Producers normally selling from Caspian Sea ports in Russia and Kazakhstan are said to be considering diverting tonnages to the Black Sea. The end of 2011s’ optimism, when Russia looked to be considering new financial transactions opportunities with Iran, seems to be waning as no concrete decisions have yet been announced, one Russian producer says.

As confidence slips about the CIS billet export price being sustainable at current levels, market participants say it hasn't reached the bottom yet, as supply is likely to increase, demand is weak, and scrap prices are set to go down as warmer weather encourages supply. Last week's lowest sales were heard at $560-565/t fob Black Sea with small prepayment, for late February shipment.


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