As it may be recalled, the Saudi Arabian producer SABIC hiked its HRC base prices two weeks ago from the previous price levels of SAR 1,650/mt ($441/mt) ex-works to SAR 1,750/mt ($467/mt) ex-works. It is reported that the producer in question has filled its order books for August as of this week and has hiked its HRC prices to SAR 1,800-1,850/mt ($481-494/mt) ex-works for September orders. On the other hand, the same producer has this week increased its HDG prices to SAR 2,850-2,900/mt ($761-774/mt) ex-works from the previous level of SAR 2,800/mt ($748/mt) and has increased CRC prices to SAR 2,100-2,200/mt ($561-587/mt) ex-works.
No price increase (particularly for HDG) had previously been expected in the Middle East due to the weak end-user demand in the region. In fact, it is hard to say there is significant upward movement in demand for HDG in the Middle Eastern countries' export markets for the time being. Saudi Arabia's current HDG offers to Egypt at $680-690/mt CFR Egypt have not been accepted since it is possible to find Kandil production HDG in the local Egyptian market at $670-680/mt excluding taxes. On the other hand, general HDG offers to Saudi Arabia are currently at $660-700/mt CFR Saudi Arabia.
In the local Egyptian market, EZDK's HRC offers are currently at EGP 2,650-2,750/mt ($474-492/mt) excluding taxes, remaining unchanged for two months now. While the same producer's HRC offers for exports were at $430-440/mt FOB three weeks ago, as of this week its offers are at $475/mt FOB for October rolling material.
It is possible to say that there is a general price uptrend is currently observed in global ex-works flat steel product prices, mainly since the destocking activities of stockists and traders have almost come to an end in spite of the declining production capacity utilization levels, and since further price hikes are thus expected by the stockists and traders. However, the acceptance or otherwise of the new price levels by end-users will determine whether the price uptrend in flats in the Middle East will continue or not. Otherwise, the flats market in the Middle East may see a W-shaped recovery scenario.
According to data from the Arab Iron and Steel Union, Saudi Arabian producer SABIC's total flat steel production in the first quarter of 2009 came to just 279,000 mt, down 31.17 percent from 409,000 mt in the same period of 2008. On the other hand, the producer's total flat steel sales volume in the first quarter of 2009 was 184,000 mt, down 43.90 percent from 328,000 mt in the same period of 2008.
Meanwhile, according to the estimated figures of the ISSB (Iron and Steel Statistics Bureau), the total flat steel import volume of the Middle Eastern countries in the first quarter of 2009 was 1.5 million mt, while the volume was 1.99 million mt in the first quarter of the previous year. According to the figures, the 59 percent decrease in the UAE's flat steel import volume leads the downtrend in the region's flats import volume for the period in question. The UAE is believed to be the country in the region which has been the worst affected by the financial crisis. However, in some markets that have not been fully integrated with the international markets (which are also markets with strong potential), a certain rise in the flat steel import volume has been observed in the first quarter of 2009 contrary to other Middle Eastern countries: for example, Iraq registered an increase of 200 percent, Lebanon saw a rise of 166 percent and Syria posted an increase of 16 percent.