The third week of October turned out to be somewhat calm in terms of trade in the Black Sea area with some deals reported to the Turkish market. CIS-based producers have finished their HRC sales for November production and some of them have already started voicing offers for December, although most of the mills have chosen to take their time to evaluate the market situation, specifically after the price declines in the Chinese market.
As for November production export volumes, there has been not much change in the overall ex-CIS allocation. Severstal has traded around 130,000 mt, while NLMK has sold 30,000-40,000 mt, according to sources. MMK, however, will export up to 300,000 mt of HRC for November rolling, versus the usual 250,000-260,000 mt per month. Ukraine’s Metinvest seems to have sold around 70,000-80,000 mt for November, which is the usual export volume for the producer.
In Turkey, the week started with a widening of the offer range as compared to the previously announced targeted levels for January deliveries. Accordingly, $900/mt ex-works was also available, but by the end of the current week the mills increased their indicative offers to $910-940/mt ex-works. In the import segment, the $900/mt CFR level was reached for ex-Ukraine material. Russian mills are expected to announce new offers at similar levels. Moreover, coated and cold-rolled coil prices in Turkey have increased significantly, taking into account insufficient stocks and the so far positive market sentiment. Still, the currency situation now under even more pressure after the interest rate decrease, is considered to be the issue which may affect the overall steel business in a negative way.
The European market still fails to provide decent support for import prices as the domestic workable levels in the southern and northern parts of the EU have weakened once again. Moreover, transaction activities have been slow, while the supply situation has improved lately. However, some sources expect buyers to restart restocking in the coming weeks which may cause prices to stabilize somewhat in the near term. The significant rise in production costs is seen as another reason for mills to avoid significant discounts. In addition, lead times have normalized somewhat in the EU, which is considered to be a good sign for now.
In Asia, where the market and business situation have not improved much, Russian mills at least do not see much opportunities to sell for now, partly as some large lots were booked in the region within the past couple of weeks. Specifically, around 120,000 mt were sold to Vietnam where demand seems not high enough to absorb further similar volumes, at least for now. In addition, the recent developments in China, although they seem to be affecting the longs and semis markets to a larger extent, are still giving rise to some caution in the flats segment too. As of October 22, HRC futures prices at Shanghai Futures Exchange (SHFE) are standing at RMB 5,308/mt ($829/mt), down RMB 432/mt ($67.5/mt) or 7.53 percent from RMB 5,740/mt on October 15.
