Metal Courier view of the CIS long products market

Wednesday, 20 September 2006 15:51:59 (GMT+3)   |  
       

At the SteelOrbis IREPAS conference in Prague on Tuesday, speaker Svetlana Delamure, Head of International Steel Markets Department from Metal Courier in Ukraine, discussed the situation of the CIS long products market. Ms. Delamure cited data from 2005 showing that the main producers of steel long products in the CIS were Ukraine and Russia with Russia having a total of over 20 mills and Ukraine following with over 10 mills. Finished long product output for January – July 2006 showed Russia producing 10.4 million metric tons and Ukraine with 6.0 million metric tons. Production growth in both Russia and Ukraine is up. However, Ukraine may see a possible decline in its production in the long run. The main producer in the Ukraine is Mittal Steel, which is actually expected to have a long product cut back by 2009, diverting their efforts instead to flat products. Russia is considered a domestically-oriented industry while Ukraine is export-oriented. The construction market in Russia is booming resulting in a very high demand for long products and driving domestic prices up. These higher domestic prices are influencing export quotations. In Ukraine, the domestic prices depend on the export market conditions. Consumption is expected to increase in Ukraine and Russia as many factors are driving consumption figures up. Such driving forces are the booming construction industry, stable GDP growth rates, the steady performance of the machine building sector, and growth in the metal ware sector. Since domestic prices for long products are so high in Russia, imports look very attractive to buyers. Ukraine's import market is looking up as well. Today, Russia's import market share is 12% while Ukraine's import market share is 17% and is expected to climb further due to high domestic prices. However, in the long run, imports are expected to decrease because of seasonal lull in demand and the ramping up of local products. Overall, the market conditions are good for finished long products. Specifically in terms of production, Russia is increasing, while Ukraine is remaining neutral. As for consumption, both Russia and Ukraine are seeing increasing numbers. For imports, Russia will see a decrease while Ukraine is expected to increase its imports. Both Russia and Ukraine have increased billet exports to Turkey while Ukraine has been doing more export business with the Middle East. Russia has pulled out of Middle East business for now. As for the scrap market, domestic supplies are growing in Russia, but we are expected to see a decrease in scrap exports or if not a decrease, then definitely an increase in price. The expected scrap prices will not go below $250 per metric ton CFR.

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