Outlook of the CIS market: July 24-30, 2006

Scrap During the last week the export prices for CIS origin A3 scrap continued to decrease, which gradually started at the beginning of July. This continues price decrease proceeds due to the lower level of demand from the traditional export markets for the CIS origin scrap. However, the situation in the local Russian market is quite different. Last week, the domestic procurement prices of A3 scrap added about Ruble 100-200 per ton (approx. $5.59) in average depending on the region and consumer. Thus, the average level of procurement prices of A3 scrap in the Russian domestic market quoted at Ruble 5,600-6,300 (approx. $222) per ton including VAT and delivery depending on the region of destination. The situation in the ports of Black sea was characterized by a decrease in procurement prices for A3 scrap. In Ukraine, the domestic scrap market remained unchanged during the last week. Long Products During the last week Chinese producers were able to put to the end the price fall for long products and billets. However, this development affected little producers from the CIS, especially Russian long products producers which were able to compensate the losses from the price decrease in the export market in expense of domestic one, where the demand for long products was still very high and prices continued their successful rise. Thus, almost all long products saw a price rise in the Russian domestic market. The highest rate of increase showed rebar, becoming dearer by 5.2 percent. The price of beam and angle in the Russian domestic market rose 1.7 percent and 3.16 percent respectively during the last week. In Ukrainian domestic market, long products showed a small rate of increases. Thus, in Kiev domestic market, the prices for rebar increased 1.77 percent, that of beam increased 1 percent, that of angle increased 1.4 percent and that of channel bar rose 1,54 percent in the course of last week. Flat rolled In the export markets, the CIS flat rolled products' prices remained at the previous levels despite the Chinese exporters' campaign to sell the surplus of the flat rolled in the world markets due to the low price for those products in China's domestic market. Despite the uncertainty in CRC and HRC prices, which decreased two weeks ago and then were restored to the previous levels, the CIS origin plates (both of commercial and shipbuilding quality) continued to meet high demand and therefore their prices remained strong. The prices for flat rolled products in the Russian domestic market started to rise, but the rates are somewhat slower than those for long products. During last week, the prices for flat rolled in the market rose in average 1.5-3 percent depending on product. In general, the relatively high level of demand for flat rolled in the domestic market supports the price rise for products. Ukrainian flat rolled market showed the similar tendencies during last week but with lower rates of increase. Thus, in Kiev market, price of CR added 0.4 percent, that of HR added 0.65 percent and that of galvanized added 1.5 percent.