During the 45th week (November 5-11) of 2007, a major development was observed in the Black Sea region scrap market; due to the enforcement of the new grain export duty by the Russian government as of last week, greater availability of ships for scrap exports and a consequent softening in freight rates were seen. On the other hand, CIS longs and flats exports did not undergo much change from the previous week.
As for the CIS domestic markets, during the week ended November 11, almost all segments of the Russian domestic market, with the exception of flat products, showed stable trends. On the other hand, decreasing tendencies were seen in the Ukrainian scrap market, while that country's domestic market registered some price increase tendencies as regards HR and structural steel retail prices.
Scrap: Russia's introduction of grain export duty positively affects CIS scrap exports
After a long period of disturbance, the Black Sea region scrap market gained relative stability regarding both A3 grade scrap supplies and prices during the 45th week. A positive role in the establishment of a stable trend in the Black Sea scrap market was played by a considerable reduction in grain exports from Russia that led to increased availability of ships for scrap exports and thereby caused a slight decrease in freight prices from the Ukrainian and Russian Black Sea shores. However, the number of ships available for scrap is still not enough to satisfy the needs of scrap exporters. As for the price, during the week ended November 11, A3 grade scrap retained its previous week's level in the Turkish market.
On the other hand, scrap deliveries from the Russian Far East ports were almost nonexistent during the 45th week due to the downward price trend in the Southeast Asian scrap market and the high freight rates.
The Russian domestic scrap market also showed a stable trend during the week ended November 11. Although some scrap price fluctuations had been seen during the 44th week, they did not affect the general price level, which stood in the range of Ruble 7,100-7,550/mt ($289-308/mt) CPT mill, including VAT.
Meanwhile, the Ukrainian domestic scrap market started to experience some downward trending tendencies as regards scrap prices during the 45th week. As of last week, the price was at a level of UAH 1,335-1,415/mt ($265-281/mt) CPT mill, excluding railway tariffs. However a further decrease of up to UAH 20/mt ($4/mt) could be expected in the upcoming weeks.
Longs: CIS longs exporters consider price hikes; how rational is such a move?
The level of billet deliveries to the Middle East and Gulf markets from the CIS continued to fall due to the low level of purchase activities in these markets during the 45th week. On the other hand, as during the previous weeks, supplies to Iran and Southeast Asia continued to be the most profitable ones for Russian and Ukrainian billet exports during the 45th week, regardless of the stabilization of prices in these regions.
Meanwhile, following the examples of the Turkish rebar exporters, who raised their offers during the 45th week, suppliers of rebar from the CIS are preparing to increase their export prices. However, it is doubtful whether any market will accept a new price rise. On the one hand, purchases activities in the Middle East and Gulf are almost paralyzed and a new price increase would not help CIS sales in those regions. On the other hand, longs prices in the Southeast Asian market are decreasing due to the declining cost of scrap, and so any increase in long product prices is unlikely to be welcomed there.
During the 45th week, retail rebar prices in the Russian domestic market finally saw some signs of stabilization. The main positive roles in this achievement were played by the lowering of market stocks and the reduction in import deliveries.
On the other hand, the Ukrainian longs market saw some mixed tendencies during the week ended November 11. Whereas rebar - the prices for which had decreased during the 44th week in the Ukrainian retail market - did not show any price fluctuations during the 45th week, structural steel tried to regain its previous levels during the week ended November 11, after its substantial drop of the previous week.
Flats: CIS flats exports remain stable
The CIS flats export markets displayed stable trends during the 45th week. Although the level of purchase activities for CIS-origin products in Turkey and in other export markets was moderate, supplies maintained unchanged price levels.
The Russian domestic flats market registered some negative trends in retail prices during the 45th week. Thus, in the course of the week in question the price for HR decreased by Ruble 40/mt ($1.5/mt), while the CR price dropped by Ruble 130/mt ($5/mt).
Meanwhile, the Ukrainian domestic flats market saw some price rising tendencies in the HR segment during the week ended November 11. Against the background of stable prices in other flats segments, the HR retail price increased by UAH 20/mt ($4/mt) in the course of last week.