6th week CIS market review: CIS exporters push for increased levels

During the sixth week of 2007, the CIS export market saw upward trends in respect to all product types, except for rebar and wire rod. Whereas increasing trends in scrap, semis, and structural steel were seen due to favorable conditions in the CIS export markets, a price rise in flats was observed due to the increases in the offering prices of the CIS producers. As for the domestic markets, the price announcement by the domestic producers brought a stir to the Russian and Ukrainian domestic flats and longs markets. Scrap: Upward trend continues in export markets The Black Sea region scrap market continued its strong trend - which has by now become the norm - during the sixth week. Although the consumers of CIS-origin scrap have significant scrap reserves in hand, the relatively good market conditions allow the exporters to continue to increase their prices. Thus, during the week ended February 11, CIS-origin A3 grade scrap increased in price by about $5-10/mt. As regards scrap supplies, the availability of CIS-origin scrap for export remained limited due to strong consumption in the domestic market. During the sixth week of the year, the Russian domestic scrap market saw a very interesting development. If during the fifth week some steel mills decreased their procurement scrap price by on average Ruble 200/mt, a diametrically opposed price movement was observed during the sixth week in the Ural region of Russia, where various mills hiked their procurement scrap prices by approximately the same amount. It seems that the main factor determining the domestic price trend nowadays is the local availability of scrap in any given region of Russia, in addition to the weather conditions. The Ukrainian domestic scrap market continued its rising trend during the sixth week. The good situation in the export markets that provides support for an increase in scrap prices put pressure on the Ukrainian domestic steel mills. As a result, the procurement prices for A3 scrap have continued their upward movement. Thus, in the course of last week, scrap prices increased by UAH 60/mt ($12) in the Ukrainian domestic market. Long Products: CIS billets press for higher levels During the sixth week, CIS-origin billets reached a record level of $470-480/mt FOB Black Sea thanks to favorable conditions in the export markets. It was even heard some Russians has offered 495$/mton FOB Black Sea end of week .However, it was not yet sure whether consumers in the Middle East and Gulf regions were willing to accept the new prices of the CIS exporters. As for long products, the CIS export market showed a relatively stable trend during the week ended February 11 as regards rebar and wire rod. The main producers were not yet showing signs of determination as regards March offers, while traders decided to play it safe for a week and didn't hike their prices. Yet, the situation was different for structural steel. During the week in question CIS export offers of angle and beam increased by $5-10/mt. The Russian domestic longs market saw some increases in activity during the sixth week. The return of favorable weather to the European part of Russia, along with the increase in producers' offers for March, created a situation in the Russian retail market where some traders, trying to sell off their reserves, decreased their prices while others, trying to follow an upward price trend determined by the producer, increased their prices slightly. However, the market in general showed an increasing trend during the week in question. Thus, rebar increased by on average $5-12/mt, beam by $5-7/mt and wire rod by $7/mt. The Ukrainian domestic longs market also saw a positive correction during the week ended February 11. Thus, angle prices increased by on average UAH 30/mt ($6), channel bar rose by an average of UAH 20/mt ($4), while wire rod prices were up by on average UAH 15/mt ($5). This price increase trend during last week was largely due to the domestic steel plants' price increases for March. Flat Rolled: Price increases by CIS producers stir up the markets Regardless of the somewhat reduced demand for flats products in the CIS export market, which was observed during the fifth week, the CIS flat producers presented their new, increased prices for March during the week ended February 11. The export offers of CIS flats producers for March increased by $40-70/mt, depending on the product and the target market. Just like the longs market, the Russian domestic flats market experienced some mixed tendencies during the week ended February 11, due to the price increase announced by the domestic producers during the week. However, unlike the longs market, the flats market showed a reduction in the price gap between the lowest and highest quotations in the market. Thus, during the week in question, the lowest level for HR increased by $10/mt, while the highest level remained the same. Meanwhile, the lowest level for CR increased by $7/mt, and the highest level showed a negative correction of $16/mt. The Ukrainian domestic market showed a more moderate trend during the sixth week. Positive corrections were observed in the price of HR – by an average of UAH 12/mt ($2.5), while CR and galvanized steel retained their previous levels.