June-casting books have all been closed by vertically-integrated CIS billet producers, with small volumes remaining from scrap-based coastal mills, who mainly sell on short lead time terms.

China drove the sell-out with at least five cargoes booked from Russian and Ukrainian mills, while some volume is still being looked for by a major Saudi Arabian mill. The latter is however likely to have to book from Iran, as its price expectation is well below current fob Black Sea levels.

China started booking at $335/tonne fob Black Sea just over a week ago, progressing to $345/t fob from the same Russian seller a few dates later. Both Ukrainian integrated mills sold to China at around $375/t cfr, netting back to around $340-345/t fob, a total of three cargoes.

Current Chinese demand stands at $380/t cfr, traders say, and there could be at least one large lot available from both Russian and Ukrainian integrated suppliers, at a netback price of $350/t fob. However, this level appears to have been surpassed already.

A major Russian billet supplier confirms to Kallanish the billet selling price at slightly below $360/t fob, but no further details were made available. This level is in line with traders' and mills' idea of current workable price levels. Some, however, are concerned over a bubble forming, based on Chinese buying habits. "If anything goes wrong, trend changes direction, there is a danger of cancellations and distressed material in the market," one trader notes.

Meanwhile, demand has picked up in the Mediterranean, where Russian scrap-based mills and a Ukrainian producer have been achieving $370-375/t cfr this week, depending in the supplier. At least 20,000 tonnes was booked in Italy at this level and another 10,000t was booked by East Africa, netting back to around $350/t fob and $345/t fob respectively. Egypt remains at $360/t cfr and is out of action at present, while the rest of North Africa is also in wait-and-see mode.

Southeast Asia continues to ramp up its interest, having reached $370-375/t cfr levels, but buyers are opting for 10,000-20,000t lots. Only large traders able to put together large lots for freight economy are able to work with the destination from the Black Sea. These deals carry a margin of only $2-3/t and much can go wrong currently with demand and the freight market, meaning it is not worth the risk, traders explain,

With June practically closed and on a high note, mills are not in a position to sacrifice on prices. However, there is still the danger of the market overheating before real demand returns for finished products.