During the 42nd week of 2007 (Oct. 15-21), the CIS export markets were governed by different trends. On the one hand, the Black Sea region scrap market was still calm due to high freight rates and the scarcity of ships. On the other hand, ex-CIS billets could not find buyers in their traditional export markets - the Middle East and Gulf regions. Meanwhile, the markets of Southeast Asia and Iran were still the most attractive for CIS billets and longs exporters. As for flat products, during the period in question the CIS export markets were calm. However, a positive mood prevailed regarding the future development of the market.
In the Russian domestic market, flats and longs retail prices continued to fall during the week ended October 21, while scrap prices saw stabilization. On the other hand, the Ukrainian domestic market saw stable trends in longs and flats but rising tendencies in scrap.
Scrap: Scrap consumers see hopes fade of CIS export price decrease
Turkish scrap consumers continued to abstain from the Black Sea region scrap market during the 42nd week of 2007 in the hope of a possible price reduction. However, due to the continuing high freight rates and the low availability of ships, many market players believe that the ex-CIS origin scrap price will not decline in the near future. The only possible grounds for a reduction in the CIS origin scrap prices will be a decrease in current freight rates, which may occur after the enforcement of the Russian grain export duty in November. As expected by market players, following the enforcement of the grain export duty, grain exports will decrease from Russia, allowing scrap exporters to have more ships available for their shipments. Meanwhile, the scarcity of ships from the Ukrainian and Russian Black Sea shores affects freight rates. As for A3 grade scrap, this material saw a $5/mt increase during the week in question.
The Russian domestic scrap market did not see any price fluctuations during the week ended October 21.
On the other hand, Ukrainian domestic scrap market saw a new wave of price increase during the week in question. As a result of the steel producers' pricing policies, the A3 grade procurement scrap price in the Ukrainian domestic market increased by an average of UAH 50/mt ($10/mt).
Longs: Have CIS exporters changed their target markets?
While the hopes of CIS billet exporters for a revival of market activities in the Middle East and Gulf Regions were not realized during the 42nd week with consumers in these markets mostly abstaining from purchases, sales to the Southeast Asian markets remained very profitable for CIS billet exporters, regardless of the small price decrease seen during the week in question. In addition, increasing billet consumption in Iran has attracted CIS exporters to this market as well.
Just like the billet exporters, CIS longs exporters lost their hopes as regards the reactivation of the Middle East market, which did not materialize even after the end of the religious holidays. As reported by market players, consumers in the region have accumulated relatively large amounts of stock and continue to press suppliers for further price reductions.
Meanwhile, prices continued to fall in the Russian domestic longs market during the week ended October 21. Thus, the rebar price registered a drop of Ruble 300/mt ($12/mt) in the Russian retail market, while wire rod decreased only by Ruble 50/mt ($2/mt).
The Ukrainian domestic longs market saw some negative correction during the 42nd week. As a result of the slight demand deterioration, rebar in the Ukrainian retail market dropped UAH 10/mt ($2/mt).
Flats: CIS flat export markets are governed by relative stability
Following the price announcements by the Russian producers for the Turkish market during the 41st week of 2007, during the 42nd week Ukrainian producers announced their prices, which followed the path delineated by the Russian prices. Since there was almost no change in the new prices (while some producers even decreased their prices) the market seems to be accepting the new offers. Meanwhile, other CIS flat export markets retained their stability as well during the week in question.
The Russian domestic flat market continued to soften in terms of retail prices during the week ended October 21. Thus, the HR retail price decreased by Ruble 400/mt ($16/mt), while CR showed a Ruble 60/mt ($2/mt) drop in the Russian retail market.
On the other hand, during the 42nd week the Ukrainian domestic market saw some minor price decreases after producers had reversed their price increase during the 41st week.