Flat prices in Europe and M. East continue uptrend while end-users resist

Friday, 29 February 2008 15:31:33 (GMT+3)   |  
       

Following the announcement of the iron ore price increase of 65-71 percent, although there is a prevalent expectation that the flat mills will continue raising their prices at the beginning of the second quarter, end-users, especially those in Europe, are trying to resist higher price levels.

The question being asked in the flats market - which has seen extraordinary increases since the beginning of 2008 - is to what extent prices will soar and whether the HRC price will reach the level of $1,000/mt or not. The prices of some mills, with extras included, have even exceeded the level in question. Meanwhile, the prices for pickled and oiled materials have already reached $1,000/mt on CFR Europe basis.

As regards Italy, the base prices for HRC have reached €600/mt, while the sales price for import materials has soared to €580-590/mt. Activity in the Italian domestic market, particularly as regards hot rolled materials, is observed to be more robust, whereas demand for cold rolled and galvanized materials is less active than that for hot rolled. One of the reasons for the strength seen in hot rolled materials is the pipe producers' continuation of their HRC purchases. Against the background of the continued uptrend for flat products in the Italian domestic market, demand for import products has not yet gained momentum. The main reason for this is of course the price rise observed in import products. Offer levels from Libya stand at the level of €570/mt CIF Italy. Meanwhile, in particular, a shortage of supply of thin specifications has been seen in the hot rolled segment of the Italian domestic market.

Indian producers' offer levels for Europe are also indicating a rise. The offers in question stand in a range of €605-615/mt CFR Antwerp, corresponding to the level of around €900/mt based on the recent €/$ exchange rate. The offer levels of the Indian producers are expected to soar further.

Egyptian producers have also increased their prices for HRC from the level of $800/mt FOB up to $850/mt FOB. As the prices in question are high for Europe, the Egyptian producers are mainly concluding sales for Saudi Arabia. It may even be predicted that the prices of EZDK will mark an increase, even reaching as high as $900/mt. Egyptian offer levels for galvanized materials are also indicating a rise, with the price hike in import input CRC material being the main reason.

Demand in Iran is also robust and Russia-origin offers for the country are soaring. Offers for HRC given on CFR Bandar Anzali basis stand at $840-870/mt, while CRC is at around $900/mt, with plate at $950/mt. As we reported previously, offers for the UAE are in a range of $830-840/mt CFR Dubai.

It is expected that overall world flats prices will indicate an increase at the beginning of March, a time when the prices for the second quarter will start to gain clarity. Although a price increase such as seen in the first quarter is not expected, with the announcement of April production material prices in the coming weeks, we will have a clearer idea of how high prices will reach.


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