Russian HRC producers, who have generally completed their export sales for June shipments, have received additional support from domestic demand and better sales to the neighboring countries. In fact, increased flats sales to Iran, due to the lack of Iranian domestic supply, have resulted in shifts in HRC volume distributions from Russia, with Russian mills being focused on sales to Iran, the CIS markets, and the local Russian market. The allocations for the traditional buyers from Turkey, North Africa and the GCC are limited and higher-priced for July shipments.
According to sources, two of the Russian mills have sold at least 130,000-140,000 mt of HRC to Iran, for May and June production, with the excessive demand emerging from the lack of Iranian domestic supply, following earlier US-Israeli airstrikes on Mobarakeh Steel. From the point when Russia started to receive inquiries from Iran, the first deals were closed at $500-515/mt FOB Caspian Sea for May and early June shipments, while later on the workable price levels increased to $520-555/mt FOB. The latest targeted price levels for Russian HRC to Iran have been reported at $560-575/mt FOB Caspian Sea.
Some sources estimate the monthly requirement of Iran at 150,000-200,000 mt, which indeed provides solid support for Russian suppliers and for the supplier in Kazakhstan. “The situation in the Caspian Sea is affecting not only Russia directly, but it drives away volumes from the CIS countries. Kazakhstan is retracting its volumes from Uzbekistan, Kyrgyzstan, Armenia and others, and these are left with unmet demand,” a source told SteelOrbis. In addition, the domestic flats market in Russia has revived slightly, although the heavy structural problem still takes a toll on consumption. Local prices of thin HRS specifications have climbed to RUB 58,000/mt ($640/mt) CPT, up from RUB 56,000/mt ($625/mt) CPT.
The combination of high sales activity from Russia to Iran, better trade to the CIS countries, and the partially related slight improvement in the Russian domestic market, have resulted in a significant cut in HRC allocations for July shipments to the tradition sales outlets of Russia. The non-sanctioned Russian mill, according to preliminary information, may not have export volumes for the next round bookings at all, following earlier $570-580/mt CFR Turkey deals for June. One of the sanctioned Russian mills seems to have completely reoriented its sales to Iran, while the other one is expected to allocate only 20,000-25,000 mt for July shipments to the MENA region. Its fresh offer price is at $560/mt CFR, up from $525-535/mt CFR in the latest sales for June shipments, with the higher end representing a top-up to a previously closed sale.
$1 = RUB 73.4
Local price in RUB includes 22 percent VAT.
