While domestic flats demand in Russia has been insufficient for several weeks now and global hot rolled coil (HRC) prices have increased substantially since the end of September, Russian producers have decided to increase their presence in the export markets. Previously, after the Russian invasion of Ukraine in February 2022 and subsequent international sanctions, only Severstal had remained relatively active in HRC exports, predominantly to the MENA region. However, this week, according to sources, Russia’s MMK, which has been focusing closely on domestic supply, has started offering HRC to overseas buyers. “MMK has not filled its order books for the third month in a row. The exchange rate of the rouble is now weaker and most probably they [MMK] have a positive margin from the current prices in Turkey,” a Russian market source told SteelOrbis.
According to market information, Russia’s MMK has been testing a price level of $520/mt CFR or $490-495/mt FOB Black Sea for November shipment in the Turkish market, but no sales have been heard. Another Russian mill has indicated $530/mt CFR Turkey, versus bids of $515/mt CFR, while the overall interest from buyers has been rather modest. Instead, the mill has found buyers for approximately 30,000 mt of HRC for November shipment in North Africa at $530/mt CFR. The price level is estimated at around $490-500/mt FOB Black Sea and approximately $475-480/mt FOB Baltic Sea.
In the Turkish market, Russia’s price is the lowest offered due to the sanctions elsewhere against Russian mills. Still, although China has been offering at $552-555/mt CFR in the latest indications versus Russia’s $520-530/mt CFR, Turkish buyers are not eager to deal immediately with Russian mills. “The market is unstable and buying from Russia is still risky, especially now when China’s offers seem to be weakening day by day,” a trader told SteelOrbis. Indeed, before the holiday Chinese offers stood at $560-570/mt CFR, followed by the surge to $585/mt CFR and then a roll back to the mentioned $552-555/mt CFR levels. In the meantime, Turkish mills are offering HRC at $620-640/mt ex-works, while some producers are voicing indications for December-January deliveries at $650/mt ex-works and above.
Russia is foreseen to remain relatively active in HRC exports at least while prices are quite high and profitable and while the domestic market is not providing enough support. Local Russian hot rolled sheet and coil prices for October have been maintained at RUB 68,000/mt CPT or around $580/mt CPT, at an exchange rate of $1 = RUB 97.