Interesting days are observed in the global steel markets, as the producers in the Far East have finally started to reach agreement on iron ore prices. In the first deal of the current year, Rio Tinto has announced its agreement with Nippon Steel for a 33 percent cut on the fine iron ore price and a 44 percent drop in the lump iron ore price for the contract year commencing April 1, 2009. With the conclusion of this deal, it now remains to be seen what contract price levels the Chinese producers will agree on.
The direction of the global iron and steel markets is very susceptible to changes in demand levels. While the global long product markets had previously registered certain levels of activity, prices have fallen down again in line with the downtrend in demand. For flat products, a more stable picture is still seen. Meanwhile, CIS flat producers have increased their prices. However, as regards other European countries, it can be said that price levels have not changed and, in particular, have not registered any decrease. According to market players, this situation would certainly seem to indicate that bottom prices have been reached and that no further decrease is anticipated.
In the past week CIS producers have increased their flat product prices for July shipment. This decision has been made also under the influence of sales to Far East Asia and the depreciation of the US dollar. Russian producers' HRC offers for July shipment are at $385-395/mt FOB. Ukrainian producers have also increased their HRC prices to $355-360/mt FOB. While Russian HRC offers to the Far East are at $420-430/mt CFR, Chinese buyers are feeling uncomfortable due to the Chinese government's antidumping review against HRC imports from Russia.
In Europe, in general no price change in flat products is observed. In southern Europe, HRC prices are at €310-330/mt, CRC prices are at €380-400/mt, both excluding VAT. Looking at Europe, it is observed that there has been HRC sales activity from Canada and Mexico to western and southern Europe in particular in May. The deals in question have been at €300-315/mt CFR southern and western Europe. Since demand is weak in the local markets of the countries in America, Mexican and Canadian producers have turned their focus to Europe for sales.