Regardless of the beginning of the general revival in the global rebar market, which has been evident since the end of last week, the Russian domestic rebar market has continued its downward trend during the current week.
This week, domestic traders offered rebar at Ruble 230-300/mt ($9-12/mt) lower than during last week. Thus, in Russia's European regions rebar is being offered at an average of Ruble 24,080/mt ($945/mt) FOT, including VAT, while the same quality rebar is being offered to the Ural regions at Ruble 26,150/mt ($1,025/mt) FOT, including VAT.
Meanwhile, imported rebar from other CIS countries and from Turkey is quoted at a level of Ruble 23,190-23,290/mt ($910-914/mt) FOT, including VAT, in the retail markets in Russia's southern and central regions.
Prices in the Russian domestic market have continued to slump under heavy pressure from the currently high volumes of imports. For instance, in June 2007 Russia imported about 150,000 metric tons of rebar - the highest ever volume. In addition, the general slowdown in the global market at the end of June and first half of July made the Russian market very attractive for rebar exporters from Turkey (in June Turkey accounted for one third of all Russia's rebar imports), Belarus, Ukraine and China. As a result, the domestic market experienced excess supplies of imported products, which pushed the domestic market price down.
Some market players expect the rebar price to drop further next month since the price gap between the Russian domestic market and the international markets is still very large and therefore the Russian market is very attractive for foreign supplies. According to some estimates, the rebar price will fall by $40-60/mt before the market recovers its equilibrium.
Indeed, we can see the confirmation of this forecast at the moment, as the Russian domestic rebar producers have decided to decrease their domestic rebar prices by an average of four-to-six percent for August delivery. However, the increase in the billet market (Black Sea and Middle East) and in the rebar market (Turkey) may change this situation for September deliveries.