Russian flats producers, who have been facing a seasonal decline in local end-user demand and lower prices, are now enjoying livelier trade, which is expected to potentially lead to higher prices. However, the situation is not due to any higher levels of demand in the market, but is linked to the limited supply from Kazakhstan.
The recent accident that happened at the large Ekibastuz-based power station has significantly limited electricity supply in the northeastern region of Kazakhstan. In fact, along with power supply cuts to civilians in several cities, the government has limited power supply to the industrial sector. As a result, according to sources, ArcelorMittal Temirtau (AMT), the country’s leading steel producer, has been forced to limit its daily operations, resulting in a shortage of supplies to domestic customers and buyers in Russia. “Their [AMT] power supply is minimal. They are slowing down the rolling lines and shifting the orders which they have from Russian pipe-makers and traders,” a source told SteelOrbis.
This situation has created an additional demand in the market in Russia, as there are delayed deliveries, while local mills do not have the allocation for prompt lead times. According to sources, AMT used to supply at least 150,000-170,000 mt of flats to Russia per month. Sources have estimated that as of now AMT has decreased its presence in Russia by around 50 percent as per ongoing shipments, and the percentage may increase.
Aiming to benefit from the situation, Russian mills may increase their local sheet prices for January. Some sources expect the producers will be back at RUB 56,000-56,500/mt (around $680-685/mt) CPT, while earlier the offer levels were at RUB 55,000/mt ($665/mt) CPT.
