During the 40th week of the year (October 1-7), the CIS export markets were characterized by an overall wait-and-see stance as regards the future. In the Black Sea scrap market, the tension over prices between scrap exporters and consumers entered a deadlock, with neither side willing to give up its position. In the billet and longs markets, regardless of the price reduction performed by CIS exporters, consumers preferred to continue to abstain from purchases. Meanwhile, the CIS flats export market was expecting a new price announcement, which according to market rumors would be in an upward direction. When looking at the development of the Russian domestic steel market during the first week of October, attention should be given to the new wave of scrap price rises. On the other hand, longs continued to decrease while flats stood unchanged in the Russian retail market. Meanwhile, the Ukrainian domestic steel market showed almost no changes during the week in question compared to the previous week.
Scrap: Russian scrap market once again on the rise
During the 40th week of 2007 (Oct.1-7), the Black Sea region scrap market was still in a state of stalemate. Whereas A3 grade scrap exporters from Russia and Ukraine continued to be reluctant to decrease their prices below $345/mt CIF Turkey, scrap consumers were pressing for lower prices. Meanwhile, the announced freight rate increases for the fourth quarter give every reason to believe that this level will move up rather than decrease in the near future.
The Russian domestic scrap market entered a new price increase phase during the week ended October 7, with several steel mills announcing a Ruble 100-300/mt ($4-12/mt) rise in their procurement scrap prices. Meanwhile, the general Russian domestic price level for A3 grade scrap is slowly but steadily moving toward the Ruble 8,000/mt mark ($319/mt).
The Ukrainian domestic scrap market experienced a stable trend during the 40th week.
Longs: Will consumers accept new reduced prices of CIS billets and longs?
In the week ended October 7, CIS billet exporters decreased their prices for North Africa, after having cut their prices for exports to the Middle East during the 38th week. The new price level was established at $515-520/mt FOB Black Sea. However, due to the low level of activity in both of the markets in question, neither region was willing to accept even these new reduced prices. On the other hand, CIS origin billets were welcomed in the Southeast Asian market, where consumers struggled to meet their needs due to the absence of Chinese offers.
As had been expected during the last week of September, CIS longs exporters followed the road of Turkish longs producers and reduced their prices to $515-520/mt FOB Black Sea for November rebar deliveries to the Middle East.
A trend of price decline prevailed in the Russian domestic longs market during the 40th week. In the course of the week in question, the price of rebar in the retail market was reduced further by Ruble 300-400/mt ($12-16/mt) in response to the price decreases announced by the Russian domestic producers and to the price cuts in imports for October delivery. Meanwhile, the wire rod price, which was relatively stable in the retail market, decreased by Ruble 300/mt ($12/mt) in the central regions of Russia.
The Ukrainian domestic longs market was stable during the 40th week. On the other hand, structural steel showed a slight upward tendency in the country's retail market.
Flats: Ex-CIS flats expected to rise, but by how much?
During the first week of October, the CIS flats export markets were in a calm state, awaiting the new price announcements by the Russian and Ukrainian flats producers. While the export markets are not showing much tolerance of high prices at the moment, the rumors say that the prices for HR and CR are likely to increase due to the rising freight rates and the increasing production costs in the CIS.
The Russian domestic flats market showed no changes in prices during the 40th week, regardless of the price decreases announced by the domestic producers for October deliveries.
On the other hand, the Ukrainian domestic flats market started to show some signs of a rising price trend under the effect of the domestic producers' price increase. Although the demand for flat products in Ukraine is not promising, producers need to raise their prices in order to compensate for the high prices of raw materials.