The hot-rolled coil (HRC) offers from Russia have been reported in several international markets lately, trying to convince buyers with a discounted price. Although the situation changes from mill to mill, the payment remains an issue, the same as finding a vessel and getting insurance. Forced to export at prices lower than the market levels, Russian mills are under pressure from their strengthening local currency, which cuts their rouble profits from overseas sales. Moreover, export HRC prices from Russia are much lower than the domestic prices, though the local levels have been also decreasing due to the unfavorable market.
The latest HRC prices from Russia to Turkey have been voiced in a wide range of $615-670/mt CFR depending on the mill, down $20-55/mt over the past week. In addition, this week MMK offered at $650-660/mt CFR UAE while NLMK, according to sources, voiced $670/mt CFR to Pakistan for SAE1006 material. Also, MMK offered $640/mt CFR for HRC to Vietnam, as SteelOrbis reported. As a result, in Turkey Russia’s offers for non-NLMK HRC are at $60-65/mt lower levels than for other import origins, while in Pakistan and the UAE this difference is $80/mt and $20-30/mt respectively. In Vietnam, which is considered by Russian mills as a non-promising destination due to buyers’ resistance to dealing with material of toxic origin, their offers are $35-70/mt lower than the closest prices for materials of non-toxic origin.
Taking into account around $50/mt freight from Novorossiysk to Turkey, Russia’s ex-Black Sea prices are at around $570/mt FOB from MMK and at $610-620/mt FOB from NLMK. In the GCC and Asia, freights to Pakistan and UAE are estimated at around $80-100/mt from Russian Far Eastern ports, while the freight to Vietnam is considered at around $70-90/mt from the same ports. Therefore, Russia’s HRC price is estimated at around $550-570/mt FOB Far East.
Given the low level of actual trade due to sanctions-related difficulties, ex-Russia export HRC prices are rather potential ones than actual ones since the mills mostly refrain from confirming the low levels to buyers and the number of the real deals is scarce.
In the meantime, the latest domestic Russian prices for hot-rolled sheets have decreased by $37/mt (RUB 7,200/mt) to $795/mt (RUB 50,800/mt) CPT. The inland railroad transportation cost from Far Eastern ports is estimated by the market players at around $95-150/mt (RUB 5,000-8,000/mt) while to the Black Sea at around $95/mt (RUB 5,000/mt). “The strong rouble kills the effectiveness of exports,” a source told SteelOrbis. Some sources estimate that ex-Russia HRC exports, at least from Far Eastern ports, are not workable at the rate of $1 = RUB 52-53 and until it is back to 58-60 Russian exporters will hardly be active in this region.
In the meantime, according to some market players, the local demand from construction specifically has picked up somewhat, but the high stocks in the market and specifically on the mills’ side have failed to trigger price increases.