During the 12th week of 2007, the price increase trend in the export markets continued for all CIS-origin products. However, last week's price rises were somewhat lower than those of the previous weeks. Yet, it is too early to say that the CIS export markets have stabilized. The price increase trend continued in the Russian and Ukrainian domestic markets as well, being visible in particular in the scrap and long segments. Meanwhile, only the Ukrainian flat market shows the strong characteristics and preconditions for a further price increase.
Scrap: prices stabilize in export markets. But for how long?
During the 12th week of this year, the Black Sea region scrap market finally stabilized. Although the supplies of scrap from the CIS were very scarce, the main consumers in Turkey were reluctant to pay the asked prices, seeking instead to push them down. In the current market situation, CIS exporters have the upper hand in price determination due to their strongly rising domestic markets and the scrap deficit in the international markets.
The week ended March 25 was characterized by a new wave of scrap price rises in the Russian domestic market. At the end of the week in question, Severstal hiked its scrap procurement price by Ruble 600/mt ($23), thereby destroying all the market players' hopes of avoiding a price race for scrap supplies.
The Ukrainian domestic scrap market was also governed by a price rising trend during the 12th week. However, compared to the larger scrap price rise of the previous week, this week an increase of only UAH 15/mt ($3) was seen in the Ukrainian domestic market.
Long products: smaller price increase but no stop in sight yet
Ex-CIS billet offers continued to increase in the export markets during the week ended March 25. However, the rate of increase during the week in question was relatively small - only about $5/mt - compared to the previous weeks. Yet, it is too early to say that billets prices have stopped their rise in the international markets, since demand for this steel product is still very high. In addition, the redirection of billets to the domestic markets in Russia and Ukraine, which process has already started, may push their export prices higher.
The Russian and Ukrainian producers were almost absent from their export longs market during the 12th week. As for the Russian longs exporters, domestic sales seem to be more profitable at the moment, while it is also beneficial for the Ukrainian producers to supply their longs products to the Russian domestic market.
The Russian domestic market has started to present more favorable conditions for both domestic producers and importers. During the week ended March 25, no export offers were seen coming from Russia. Instead, longs from Turkey, Ukraine and China were taking their place in the market that in its current state cannot be satisfied by the local producers alone. Longs prices in the Russian domestic market continued their rising patterns, showing a $40/mt increase for rebar and a $24/mt increase for wire rod in the Russian retail market.
The Ukrainian domestic market maintained its rising trend of the previous weeks during the 12th week of the year. As during the 11th week, the most noticeable increase was observed in the structural steel segment, where beams increased by UAH 75/mt ($15) and where channel bar rose by UAH 60/mt ($12). Meanwhile, rebar prices increased by just UAH 15/mt ($3) last week.
Flat rolled: price rise bears regional characteristics
During the 12th week of the year, the CIS flats export market continued to be governed by a price rising trend. Nowadays, CIS exporters are mainly focused on the European and Middle East markets, since the prices in these regions are rising on the back of scarce supplies. Thus, in the course of the week in question, CIS-origin HR increased by an average of $50/mt (depending on the regional market), while CR of the same origin increased by $10/mt.
Flat products in the Russian domestic market showed just a slight increase in the week ended March 25. Although the demand for flats in the Russian domestic market started to pick up, the buyers are not ready to accept a price increase as in the longs market. In the course of the week, HR increased only by $10/mt while CR increased by $2/mt in the Russian retail market.
The scarcity of rolling stock in the Ukrainian domestic market opened the way for yet another price increase for flat products during the 12th week. In particular, this tendency has been seen in cold rolled, which increased by UAH 50/mt ($10) in the space of a week. Meanwhile, HR showed only minor price fluctuations.