Russian mills continue to refrain from concluding flat steel export sales to distant markets and are still enjoying decent sales activity in their local market. The situation in the construction sector, though structurally remaining under pressure because of ongoing financial issues, has been better lately supported by some projects, thus allowing Russian mills to improve their sales positions. “Demand is at its maximum over the past 1.5 years … Some infrastructure projects have entered construction stage, and the interest rate [currently 14 percent] is lower than last year, and so some businesses decided to build what had been delayed,” a source told SteelOrbis. In the meantime, it is largely believed that the situation is temporary and that demand will decline seasonally towards winter.
Since late July, according to sources, local flats prices in Russia have increased by RUB 2,000-3,000/mt to RUB 63,000/mt for HRC, to RUB 66,000-67,000/mt for thin HRS and to RUB 68,000/mt for thick HRS, all on CPT basis. In reality, due to the currency fluctuations, the actual price levels in US dollars have increased by $2-11/mt to $623/mt, $653-662/mt and $672/mt CPT, respectively. In the CRC segment, one mill has announced its offers for the coming period at RUB 71,500/mt ($707/mt) CPT.
As for exports, no solid offers have been heard from Russia mills basically for the third month in a row, while they have no intention of returning to the export markets at least for now. “HRC globally is not good. Prices are low and many buyers evaluate Russian prices as needing to be lower than China in order to be considered,” a trader told SteelOrbis. The potential workable price for HRC from Russia is estimated at $500/mt FOB for small lots, with bulk price ideas reported at down to $480/mt FOB, which overall is much less than the workable local price levels for HR materials. In the Black Sea region, the situation is additionally aggravated by war-related risks and by the almost complete stoppage of maritime operations, including shipments from Novorossiysk. “Freights here can go above $50/mt and the risks are too big to be undertaken for such low margins,” a source said. The potential HRC price from Russia for Black Sea cargoes is estimated at $510-515/mt FOB, SteelOrbis understands.
Local price in RUB includes 22 percent VAT.
$1 = RUB 89.2
