The price increase trend observed in ex-CIS flat steel offers (under the influence of the general improvement in the overall flat steel markets due to the summer season, low stocks and lack of supply) has this week also started to be seen in Europe.
The Turkish flat steel market has reacted more rapidly than other countries' markets to the price uptrend in Europe. Due to Erdemir's raising of its list prices for the first time in a long time, due to the increase of $70-80/mt in ex-CIS flat offers to Turkey and also given the lack material in the local Turkish market, both orders have increased and price levels have risen in Turkey. It seems that the tightness of supplies in this market will continue until stockists receive their orders.
Last week, after the increase in ex-CIS flat steel offer prices, the anticipated price uptrend has become evident in Europe with ArcelorMittal's announcement of a hike of €30/mt. Although demand in Europe has improved, buyers are still cautious when faced with the increased prices. In southern Europe, Italy in particular, HRC price levels are currently at €360/mt ex-works, excluding VAT. Although producers in Italy have not yet announced higher prices, the expectation is that they will increase their HRC base price level by €30/mt from the current range of €330-340/mt ex-works excluding VAT to €360-370/mt ex-works excluding VAT. However, for the time being they are just testing the response of the market.
Sales to Far East Asia and India constitute the main factor behind the fullness of the order books of the Ukrainian and Russian producers. Also, CIS prices have risen due to the decline in stocks in Europe and Turkey, the improvement in demand observed in all these regions and and due to tight supplies. It is expected that the CIS producers will increase their prices for August in July; however, the approaching holidays and Ramadan also need to be taken into consideration.
As regards the Middle East producers, their HRC export prices are currently at $475-500/mt FOB. It seems that the producers in this region are targeting the price level of $500/mt for now. In this region, although demand improvement is the main reason behind the price uptrend, supply is unable to match the increased demand levels.