The outlook of the CIS market: August 8-14

Wednesday, 16 August 2006 17:55:56 (GMT+3)   |  
       

Scrap During last week, CIS scrap market saw a small breakthrough in export direction. Turkish consumers, who remained silent for almost a month, have slowly started to become active in the Black Sea region. Due to start of activities of Turkish consumers during last week, the price levels of the CIS origin A3 scrap stopped their downfall, and the transactions begun to be performed, although in small volumes. As far as the Russian domestic market is concerned, procurement prices for A3 scrap slowed down their rise but did not stop it completely. Thus, during last week procurement prices for A3 scrap rose by Ruble 200 per metric ton (approx.$7.5) in average. Although a small slowdown was noticeable in the Russian scrap market last week, the general market situation is a such (given the decreasing levels of scrap collected and raising capacities of Russian metallurgical industry as well as start of scrap reserves preparations for winter time) that, most probably, the prices would continue to rise further. In Ukraine, scrap market was characterized by stability of both domestic and export quotations of A3 scrap. The main reasons for such stability lie behind the fact that Ukrainian steelmakers do not have an additional need in scrap and their inventories are full. Long Product The tensions between CIS producers of long products and their consumers continued last week. Although there were Chinese long products present at lower price levels, Russian and Ukrainian producers refused to decrease prices due to strong domestic demands, and as a week before Ukrainian billets were offered for export at $390-395 per mt FOB Black Sea and Russian at $395-400 per mt FOB Black Sea. The Russian domestic long products market continued to follow strong trend especially in rebar. Partly due to the strong domestic market conditions, both in the sense of demand and prices, Russian long products producers were not in hurry to follow ’peace path' with users in export markets and decrease their prices. Ukrainian long products market was stable during last week, although the prices rose a little. Thus, in Kiev market, rebar price added 0.13 percent, angle price rose 0.92 percent and channel bar price rose 0.44 percent during last week, while the other long products retained the previous levels. As it can be seen, structural steel is the one segment that is growing faster than the other long products due to scarcity of these products in the market and expectation of price hike from producers. Flat rolled CIS exporters of flat rolled products continued to hold their export volumes down due to summer slowdown as well as due to the stable demand in the home markets. As far as export prices are concerned, for European market they retained the previous levels while in the Middle East they decreased under effects of Chinese exports to the region. Russian domestic market saw some sights of stabilization and the market prices stayed still in a wait for announcement of the September prices from major Russian producers during last week. The market expected that the prices for HR and CR will retain the August levels, while that of galvanized steel will rise. The expectations started to come to life during last week when some of Russian flat producers announced price rise for galvanized steel for September shipments. One of them was MMK, which raised galvanized steel prices by 3 percent for September shipment. In Ukraine, although demand in the domestic flat market was very strong, market players were reluctant to engage in ’price games' and prices, although were fluctuating for the last couple of weeks, did not show any sharp raises or falls. Thus, in Kiev market, during last week the price level of CR added 0.3 percent, that of HR added 1.61 percent but that of galvanized steel decreased 0.19 percent.

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