Last week the CIS billet market, often used as a means of understanding the global sentiment of the steel sector, confirmed the uncertainty among market operators. Raw material prices rose but steel demand remains sluggish globally.

CIS billet suppliers' offers have risen to $430-440/tonne fob Black Sea for March loading-ready material, with traders claiming that material at $430/t fob would already be difficult to obtain. 

One trader said it would be easy to sell at $420/t fob today. Another seller claims to have closed a deal at this level, but there are no other offers in the market at this price any more, according to traders, as mills have raised their expectations. 

The increase is cost-driven, as prices of iron ore, scrap and coking coal are all rising on the back of a perfect storm of major supply disruptions. These include Vale’s projected loss of around 40 million tonnes/year of iron ore following another dam failure in Brazil and extreme snow and frost in major US scrap supplying regions. 

Albeit that the producers' move to increase prices is understood by market sources, buyers are not rushing to book, as poor demand continues to drag the market down.