The main recent development in the global flats markets was China's announcement last week of an increase in its tax rebate for exports of certain steel products. In its announcement, the Chinese government maintained a zero export rebate rate for HRC, while its increased rate for CRC and coated materials was lower than expected. Consequently, the global flats markets have breathed a sigh of relief. Naturally, as the export rebate for CRC and coated materials has increased to thirteen percent, Chinese export prices are likely to decrease. However, the prospect of low-priced HRC products flooding the global flats markets is history for now.
In recent weeks, some deals for coal have started to be concluded at around $128-129/mt, down from the 2008 peak of around $300/mt. In fact, it is possible to say that this decrease is not as low as expected. On the iron ore side, the annual contracts have still not been completed, with both sides at the table still resisting even though March has now come and gone. While iron ore miners do not want to decrease their prices further, the Chinese producers are looking for a larger decrease. A resolution does not yet appear to be near. As China, the biggest importer of iron ore, has not yet agreed on the iron ore contracts, it continues to turn its attention to spot purchase activities or buys HRC or slab from CIS countries or Europe. In this way, the Chinese producers are continuing their production operations.
CIS producers have booked their production calendars full until late April thanks to slab and HRC sales to countries in the Far East. From now on they will start taking orders for May. At this point, these producers say that they are having difficulties in handling current production costs in general - they are hardly compensating for the price decreases and so would like to up their prices. Under pressure from costs and weak demand, flats producers in the CIS will start to announce their prices for May in early April. Although Russian producers would like to raise their prices, it seems they will have difficulties in getting traders to accept the new levels. Price levels of $380-390/mt FOB are being mentioned for the Far East market. Since demand is weak in Europe and Turkey, the best regions for the CIS under the current conditions seem to be the Far East Asian countries and India, provided there are no new protectionist measures and no tightening of demand.