During the 14th and 15th weeks of 2008 (March 31-April 13), all CIS export product groups saw an increase in price. However, the reaction of consumers to such price trends differed depending on the product. Thus, whereas the price rise in the scrap market was reluctantly accepted and the price increase in flats proceeded without any complications, buyers of CIS origin semis and long products showed a strong resistance to the new price rises.
Meanwhile, prices continued to rise in the CIS domestic finished steel markets, reaching new levels which are usually not accepted by end-users. As for scrap, this important raw material saw a rise in price in the Russian domestic market while remaining stable in Ukraine.
Scrap: Export sales see revival by the end of the 15th week
The Black Sea region scrap market saw a change in trend from the 14th to the 15th week of 2008. Whereas during the 14th week, the market was rather calm as regards both scrap purchases and price fluctuations, by the end of the 15th week the market returned to a more active state as regards purchases and even a price rise for A3 grade material was seen. As of the end of the 15th week, a deal for A3 grade scrap was concluded at $615-620/mt CIF. Meanwhile, ex-CIS scrap may see a considerable increase shortly as the Russian government, at the request of Russian domestic steel producers, plans to restrict scrap exports from the country.
Meanwhile, a price rising trend continued in the Russian domestic scrap market during the 14th and 15th weeks of 2008. In competition with the international scrap market, the Russian domestic scrap consumers continued to hike their procurement scrap prices which are currently moving steadily toward Ruble 12,000/mt ($511/mt) CPT mill, including VAT.
On the other hand, the Ukrainian domestic scrap market was calm throughout the first half of April.
Longs: Consumers resist price hike by CIS semis and longs exporters
Just as in the scrap market, CIS producers increased their offers for billets in the 15th week on the back of the growing prices of scrap and of other raw materials. However, the new increased prices met with resistance from most of the Middle Eastern countries. In addition, as had been expected, prices for imported billets started to rise in the local Iranian market following the conclusion of the Iranian New Year celebrations at the end of last month.
Following the footsteps of the increases in semis and scrap, CIS long producers have also increased their export prices for long products. However, just as in the semis market, consumers in the Middle East and Gulf are resisting the new price hikes.
The Russian domestic longs market continued to trend upward during the 14th and 15th weeks. Following the implementation of the considerable price rise announced by the domestic longs producers for April, retail prices for both rebar and wire rod have reached new levels. The increase margins during the weeks in question consisted of Ruble 1,550/mt ($67/mt) for rebar and Ruble 1,000/mt ($43/mt) for wire rod.
A similar situation was observed in the Ukrainian domestic longs market, where prices for rebar increased by UAH 140/mt ($28/mt) during the two weeks in question. Yet, compared to the trend in the last weeks of March, the rate of increase in the Ukrainian domestic longs market seems to have slowed down.
Meanwhile, if the CIS markets continue to show such upward trends, the market may register reduced consumption activity very soon, as end-users are now already resisting prices while traders continue to build up stocks.
During the 14th and 15th weeks of 2008, the international flat steel market saw an upward trend, involving most regions in the world. As a result of growing demand for flat products worldwide and also because of increased raw material costs, CIS flats exporters were able to implement sharp price increases. For instance, CIS flat products saw an increase ranging from $100/mt to $140/mt for their new deliveries to Turkey. Furthermore, price offer levels for CIS origin products continue to rise for the Middle East and Europe as well. Meanwhile, the steel consumers, considering the new prices to be not so unreasonable, generally accept the increased levels.
Flat product prices continued to climb up during the 14th and 15th weeks in both the Russian and Ukrainian domestic markets. In the two first weeks of April, both HR and CR increased by Ruble 2,500/mt ($107/mt) in the Russian retail market, while HR showed an average increase of UAH 150/mt ($30/mt) and CR registered an average rise of UAH 140/mt ($28/mt) in the Ukrainian retail market. As of the end of the 15th week, CR prices were quoted at higher than rebar price levels in the Russian domestic market. Meanwhile, consumption levels at these prices are at a minimum as end-users in both countries consider these increases to be unreasonable and unsuitable for the current market situation.