LME STEEL-Billet prices in Black Sea, Turkey firm

* Billet prices tick higher on strong scrap price, supply

* Buying remains thin, Europe slightly recovers, Egypt slows

By Humeyra Pamuk

LONDON, June 17 (Reuters) - Steel billet prices in Turkish and Black Sea physical markets firmed this week, supported by strong scrap prices and tight billet supplies after sharp production cuts.

Traders quoted Black Sea free-on-board (fob) billet at around $390-395 a tonne from last week's $370-375 a tonne, compared with last week's $360/$375 a tonne. In Turkey, mills were offering slightly higher prices at around $410-415.

Scrap prices edged up to around $260 a tonne, from last week's $245 a tonne, underpinning billet prices. Mills with electric arc furnaces (EAC) use scrap as raw material to produce billet.

"The resilience in the scrap price has been the major supporter for the billet price," the purchasing manager of a Turkish steel mill said. "Plus you can't find material as plentiful as you like," he said.

Production levels have been sharply reduced in Turkey, Europe and Russia as the global recession forced steelmakers to cut output in the face of tumbling demand.

The purchasing manager said the price rise was mainly due to supply side issues, whereas the demand remained thin, despite a slight recovery.

"We do see some demand from Europe, which was completely dead before. But then, the tonnages are tiny compared to what we've sold this time last year," he said.

Steel demand was booming in mid-2008, when prices touched record high levels above $1,200 a tonne for billet, triggered by massive construction and infrastructure spending in the Middle East.

While demand in major steel powerhouses like Dubai has dried up, Egypt has helped support billet prices since the start of the year. But traders say demand has slowed down significantly since May.

"I believe they've bought more than 2 million tonnes in the first 5 months of the year," a UK-based steel trader said, adding there haven't been many cargoes in recent weeks.

There was positive news from producers. Major U.S. steelmaker Nucor Corp (NUE.N) said it expects a narrower second-quarter loss because orders appear to be picking up.

"Order entry has improved in recent weeks," Nucor Chairman, Chief Executive Officer and President Dan DiMicco said in a statement. But his comments came with a warning.