8th week CIS market review: Absence of Chinese semis gives free hand to CIS exporters

Thursday, 01 March 2007 13:38:45 (GMT+3)   |  
       

During the eighth week of 2007, CIS-origin scrap, semis and longs continued to rise in the export markets. The main precondition for these increases was the absence of the Chinese exporters in the Middle East and Gulf region longs and semis markets due to the Chinese New Year holiday. As for flats, the CIS export markets during the week in question were relatively stable. Nevertheless, a new upward movement is expected to begin in the second quarter of the year. Regarding the domestic markets, during the eighth week an even more visible reanimation of the markets was seen in flats and longs. As for scrap, there was a ratcheting up of price pressure by CIS scrap exporters on the domestic markets of Russia and Ukraine. Scrap: Domestic markets experience price pressure due to exports During the eighth week of the year the Black Sea region scrap market was characterized by various trends. As regards ex-CIS A3 grade scrap availability, the worsening of the weather in Russia and Ukraine, along with the renewal of scrap purchases by domestic producers, made the already very small scrap volumes, which were now offered for export, disappear all together. On the other hand, the scrap price continued to rise during the week ended February 25, adding about $5-10/mt to its level of the previous week. The Russian domestic scrap market started to move slowly towards into an upward trend during the eighth week of the current year. Strong demand from export markets together with the worsening of weather conditions and tightness in scrap availability pushed domestic consumers into a struggle with exporters for this raw material. As a consequence, the steel mills located in regions close to the border areas became the most vulnerable. For instance, Severstal, whose main facilities are located close to the Baltic ports (most of shipments to Europe are made through Baltic ports), hiked its procurement scrap price by Ruble 200/mt ($8) at the end of last week so as to be able to compete with exporters. The price rising trend continued in the Ukrainian domestic scrap market during the week ended February 25. Due to the scarcity of scrap in the market, together with the high prices for this raw material in the world markets, the Ukrainian domestic scrap prices increased by UAH 20-40/mt ($4-8). However, this price change only affected the higher end of the existing price range. Long Products: Billets rise higher and higher CIS-origin billet rose to unbelievable levels in the export markets during the eighth week of the year. The absence of Chinese exporters in the Middle East and Gulf region markets due to the celebration of the Chinese New Year, as well as the limited deliveries of Turkish-origin products in the region because of strong demand in their domestic market, made it possible for Ukrainian and Russian exporters to control the price policies of the markets in question in the course of the eighth week. Thus, CIS-origin billets were quoted at $510/mt FOB and higher levels to the Middle East and Gulf region. As for long products, the price rising trend continued in the CIS export markets during the eighth week. However, the renewal of market activities in the CIS domestic market contributed to limited availability of Russian and Ukrainian longs for exports. The Russian domestic longs market is becoming stronger and stronger as the weeks pass. During the week ended February 25, positive corrections were seen with regard to most long products. As before, the highest level of increase was seen in domestic rebar prices which rose by on average $10-15/mt. The price rising trend for other products was more moderate. The Ukrainian domestic longs market, without lagging behind its Russian counterpart, showed even sharper increases during the eighth week. Thus in the course of the week, rebar and wire rod prices both increased by UAH 50/mt ($10), angle prices increased by UAH 40/mt ($8), while channel prices upped by UAH 100/mt ($20). Flat rolled: CIS flats export markets see stability, but for how long? The CIS flats export markets were relatively stable during the week ended February 25 compared to the previous week. A price increase is expected in the markets, but market players predict that it will only be seen in the second quarter. The Russian domestic flats market did not experience as much change as the country's scrap market during the eighth market. Some corrections were seen in both HR and CR segments of the market but they were rather insignificant. The Ukrainian domestic flats market was characterized by an increasing trend during the eighth week of the year. Whereas HR increased by on average UAH 10/mt ($2), CR saw a much sharper increase in the Ukrainian domestic market, rising by on average UAH 100/mt ($20) in the course of the week.

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