The rise in global flat product prices continues. The uptrend that started with long products has continued with flat products and has accelerated with the hike in prices for iron ore. While the possibility of flats prices reaching the level of $1,000/mt was a source of wonder over past weeks, Ukrainian steelmaker Zaporizhstal's offers for Turkey have now already exceeded the level of $1,000/mt. Prices are reaching historical highs day by day and this is causing significant discomfort to companies considering purchases of material.
Looking at the overall situation in Europe, it is seen that demand is not so strong and that so far purchases are only being performed in parallel with requirements. However, importers in Europe in particular, who were faced with price hikes after the Easter holiday, are expected to commence booking activity. Last week's HRC offers for Spain and Italy stood at the level of €660-665/mt CFR; however, this week the same offers for Italy and Spain for June/July shipment are in a range of €670-680/mt, while those for CRC vary in a range of €700-705/mt CFR and those for galvanized coils of 0.5 mm thickness stand in a range of €795-800/mt CFR Spain and Italy. There is also an expectation for a price increase in Libyan-origin HRC offers for Italy which were at the level of $590/mt FOB for May shipment.
It is expected that Russian steelmaker MMK's HRC offers, which were at around the level of $950/mt FOB until this week, will indicate further rises. Especially after the price hikes made by the Ukrainian mills, Russian mills are expected to raise their offers up to the level of $1,000/mt FOB. The latest Russian-origin HRC offers for the Middle East were at the level of $945-950/mt FOB, but offers at these levels are not available currently. New offers are foreseen to stand at around $1,000/mt FOB. While Chinese-origin HRC offers for the United Arab Emirates are at $990-1,000/mt CFR, we may start hearing reports that more bookings from China are being concluded in the Middle East due to the continuing price hike trend. Demand for Chinese materials is also likely to see an increase as the Saudi Arabian mills are selling their material to the country's domestic market and their allocation for export tonnages are limited since their order books have been filled since December. In addition, the continued price hike in the Russian and Ukrainian-origin prices may likewise contribute to boosting demand for the Chinese materials. Moreover, the fact the Egyptian mills have been concluding most of their sales for both the domestic market and Middle Eastern countries since the beginning of 2008 and that they are making price offers for the end of the third quarter may play a part in promoting booking activity from China.
While EZDK's latest base price offers of HRC for August shipment were at the level of $975/mt FOB, the Egyptian mill is not making offers for now after the announcement last week of the Ukrainian-origin prices.
The continuation of the rise in prices is causing discomfort to most buyers in Europe and the Middle East who are not sure of the future course of prices. These buyers are maintaining a wait-and-see stance as the demand in Europe is not so robust and as import price offers are hovering at very high levels. It is foreseen that the mills will continue hiking their prices for another while. Even though sales activity - seen up to two weeks ago - has come to a halt nowadays, it is highly likely that bookings will soon start to be made for June shipments, helped by the increased demand in the European and Middle Eastern domestic markets at this time of the year as we enter the season of spring.