2nd week CIS market review: New Year – new prices

After the long New Year holidays, CIS producers returned to their export markets with renewed prices. Although not much material was present in the export markets from Russia and Ukraine during the late December – first week of January period, the exporters compensated for their absence from the market by new, increased prices during the second week of the current year. As for the domestic markets, both the Ukrainian and Russian markets were relatively inactive during the first working week of 2007. The main development observed in the CIS domestic market may be said to be the implementation of the law canceling VAT on scrap operations in Ukraine, as a consequence of which the domestic scrap procurement prices saw a decrease. Scrap: changed price situation in the Black Sea market The CIS scrap exporters started to return slowly to the market during the second week of 2007 after the prolonged New Year holidays. Although purchase activities were resumed in the Turkish scrap market at the end of the first week of the current year, offers from the Russian and Ukrainian exporters started to appear in the market only during the week ended January 15. Despite their late return, the CIS scrap exporters came to the Black Sea region scrap market with increased prices, following the examples of the deep-sea scrap exporters. Thus, since late December, CIS-origin A3 scrap prices have increased by on average $5/mt. Overall, since the beginning of the current year the price situation in the market has undergone a transformation. If at the end of last year CIS-origin A3 scrap prices were more or less equal to than deep-sea scrap prices, then during the second week of January the deep-sea scrap price assumed the top position in the Black Sea region scrap market. The Russian domestic scrap market was characterized by relative inactivity during the first working week of the current year. Although the major market players returned to the market, no changes in their scrap price policies have yet been made. On the other hand, the New Year brought some changes to the Ukrainian domestic scrap market. The implementation of the law canceling 20 percent VAT on scrap operations, effective as of January 1, 2007, brought about a decrease in the domestic scrap prices. Thus, if at the end of last year, the scrap price stood around UAH 1,250-1,275/mt ($249) including VAT, then during the second week of January the scrap prices settled at the level of UAH 1,050/mt ($208). Long Products: billet prices on the rise The CIS producers marked their late return to the market in the second week of January with increased prices for both semis and long products. The reanimation of the Middle East regional market together with the strong export prices offered by the Turkish producers to that region, allowed Russian and Ukrainian billets producers to hike their export prices. It is worthwhile to mention that billets of Ukrainian origin increased by larger margins than those from Russia. Thus, compared to the late December levels, Russian-origin billet rose in price by $10-15/mt, while Ukrainian exporters hiked their prices by $20-25/mt. Currently, Russian billet exporters are making very profitable sales to Iran and therefore they are not interested in offering their products to the Middle East and Mediterranean markets. As for longs exports, since the beginning of the current year a price rise has only been observed for materials of Ukrainian origin. Compared to the end of last year, Ukrainian rebar was quoted up $10-15/mt, while the rise in wire rod prices of the same origin was $5/mt. Just like the Russian domestic scrap market, the domestic longs market in Russia also picked up slowly after the New Year holidays. The most notable change in the domestic market was observed in regard to the rebar price, which, for the first time in a long period, showed a positive correction which amounted to 1.16 percent. The Ukrainian domestic longs market, contrary to the Russian one, continued its decreasing trend of last year. Thus, in the second week of January, the rebar price decreased by on average UAH 50/mt ($10), while the channel bar price dropped by on average UAH 20/mt ($4). Flat rolled: Middle East demand allows CIS flats to rise The market of the Middle East and Persian Gulf has proved the most attractive for the CIS flats exporters since the beginning of the year. The large demand from the regions in question has allowed the Russian and Ukrainian producers to hike their prices, which had been fluctuating for some time at the end of last year. Thus, in the period in question, CIS-origin HR increased by $ 10/mt, while CR of the same origin showed a $5/mt rise. The Russian domestic flats market saw no major changes during the first working week of the current year. Although some minor fluctuations were observed for all flats products, the new price levels are yet to be determined. The Ukrainian domestic flat market has seen some minor price changes since the beginning of the current year. Compared to the late December levels, HR decreased by on average UAH 50/mt ($10), CR dropped by on average UAH 20/mt ($4), while galvanized steel decreased by on average UAH 30/mt ($6) in the Ukrainian domestic market.