Flat rolled market – Outlook of post-holiday period

As we mentioned in our analysis dated August 11, 2006, following the end of the holiday period in Europe, prices began to increase. In the global market, these increases are expected to continue in the short run. However, the decision that will be made by the US market - one of the major markets - regarding stock management will play an important role in the rate of these increases or when these increases will eventually level out. After a relatively stable period in the local prices of the CIS market, a downward trend has now commenced. The fact that winter is approaching in the CIS countries seems to be affecting all CIS, European and Middle Eastern markets. CIS countries may opt to increase their exports before weather conditions deteriorate further. In addition, the end of political turmoil in Ukraine appears to be lowering pressure on the prices. The upward trend in galvanized and cold rolled materials following the post-holiday period in Europe maintains its momentum. We can say that the revival in the automotive industry following the holiday period is effective in these increases. While the hot rolled markets have so far remained tranquil in Europe, after this week, these markets also are expected to gain momentum. In addition, international sport events due to take place in Europe in the coming years are expected to contribute to an overall increase in steel demand. The Chinese market has long remained in a calm state; however, recently price increases have started to be observed in the country. Markets, which followed a stable trend for the last month, have begun to pursue an upward trend since last week. It is thought that international sport events due to take place in China in 2007 and 2008 will also cause a rise in demand. Moreover, the Chinese government's decision to lower the export tax rebate on finished steel products by 3 percentage points means that the 11 percent rate has now dropped to 8 percent. With this new rate, a slight decrease in Chinese exports is expected and an increase in export offers may be observed. The North African market has started to emerge as the preferred market of many producers and traders. Staying on the African continent, the fact that South Africa will host the 2010 World Cup is bound to increase construction demand, and consequently steel demand as well.