Flat rolled market outlook

The fact that CIS market is still strong, that US is still a strong buyer, though not strong as in the past, and that Europe is getting ready for holiday still stand as a problem for hot rolled and cold rolled markets in Turkey. Moreover, price rise of around $110/mt in hot rolled materials by Russian Severstal in the last two months and price rise of around $80/mt by another Russian steelmaker MMK, together with the price rise of around $70/mt by Ukrainian Zaporizhstal cause markets to rise. The price hikes in the CIS countries' exports, coupled with the similar increases in their local markets has caused an increase in global markets. US, which appears to be the general buyer at these levels, took the first place in exports of CIS countries. If lower demand from US reduces further and local demand in CIS countries reduces to a certain extent, the mills in the CIS may direct their focus on markets such as Turkey and the Middle East with the effect of approaching holiday period in Europe. Under these circumstances, current price levels may gain some kind of stability and even may soften a bit. Moreover, Bulgarian steelmaker Kremikovtzi still continues loading the orders it could not get through due the problems at the plant. Likewise, Ukrainian mill Ilyich still tries to close its old contracts. Regarding these contracts, Ilyich asks for higher prices from the buyers since its prices remained quite lower than rising global markets. Apart from the rises in global hot rolled and cold rolled prices, a downward trend is observed in raw materials for a month. For instance, zinc prices, which were at $3,900/mt early this month, are currently at around $2,900/mt. It is observed that aluminum prices, which were at around $2,600/mt, have decreased around $2,400/mt level. The rise in cold rolled, hot rolled and slab prices have not been sufficient to cause an effective price decline in galvanized products, despite the decline in zinc prices. Rise in slab prices all over the world has impacted the prices of all flat rolled products. Especially, CSN in Brazil will reportedly resume its operations next month after a five-month operation halt. The mill, which meets 60 percent of the total production in the country, is expected to resume its operations next month. Moreover, the price of slab, which US supplies from CIS countries, still keeps its firm level. Erdemir, in order to catch up with the rapidly changing global markets, increased its prices once each in April and June, and twice in May. However, prices of Erdemir are still lower than that of similar flat rolled mills. Under these circumstances, Erdemir may soon hike its prices.