CIS issues post-holiday flats offers, while demand from Middle East and Turkey is still low

Friday, 16 January 2009 10:44:27 (GMT+3)   |  
       

As we indicated in our flats analysis last week, price levels have started to be announced for 2009 with the return of the CIS countries from their holidays. However, it is not yet clear whether these price levels will be accepted in the flats market. While offers have started to be heard, for the time being purchasing activities are not at high levels. Lack of confidence with regard to the direction of the markets and also credit issues at the banks side have been exerting a big impact.  Although some activity is seen in the scrap, billet and long product markets, the anticipated levels of movement have yet to be observed in the flats market. The biggest problem in this market is that end-user demand has still failed to show a recovery.

We have mentioned that China had been purchasing flats from CIS countries, in particular for February shipments, throughout November and December. According to the latest available data, in November and December 2008 HRC bookings concluded from the CIS to China amounted to about 280,000 mt, and the current price range is at $390-440/mt CFR China. Still China has demanded HRC from CIS to purchase. The Chinese domestic market's being strong and production cut-backs has affected on demand in question. This week, offers given from Russia to China for HRC are at $450/mt CFR China, while there are also offers from South Africa and Brazil to China.

This week, Ilyich has been offering HRC to the export markets in a price range of $380-390/mt FOB Ukraine, while HRC offers given to Turkey by the producer have been standing at the level of $405-410/mt CFR Turkey. Meanwhile, Russian origin hot rolled coil offers given to Turkey are around the level of $425/mt CFR Turkey. Ex-Ukraine HRC is being offered by traders to Europe at the price level of $400-410/mt FOB, whereas the same origin CRC is also being offered by traders to Europe at the price level of $480/mt FOB. Nevertheless, it is thought that actual deals may be concluded below these levels. Meanwhile, it is heard that a HRC booking from Egypt has been concluded at the level of $460-470/mt CFR Turkey.

As for the Middle East, demand is not at high levels in the local Saudi Arabian market. HRC sales prices of Sabic in the local market are at $450/mt ex-works. It is also reported that Sabic has been offering HRC to the export markets at a price level of $430/mt FOB Saudi Arabia. Looking at the UAE, HRC offers from the CIS to the UAE are hovering in a price range of $440-450/mt CFR, while buyers in Dubai have shown no interest in these offers at all. The main reasons for this situation may be indicated as both low demand in the domestic market and also problems in obtaining credit. Buyers in the UAE mostly prefer to purchase from the domestic market or from local entrepots.

Moving to Egypt, new production HRC offers to the export markets are at the price level of $450/mt FOB, while it is heard that bookings have been concluded at this level. Meanwhile, demand is on a slack trend in the Syrian domestic market. New production HRC offers given from Ukraine to Syria are standing at the level of $390-400/mt FOB. Also, from stockists in the Syrian domestic market HRC prices are at $420/mt ex-warehouse, while CRC prices are at $435/mt ex-warehouse.


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