The Russian hot rolled flats market is now going through times of limited and slowing demand since the consumption from some of the key end-user industries is weak, mills report. In addition, although there is a certain struggle to deplete stocks in the market, stock levels are not yet critically high. Still, retailers are not in a rush to make new purchases, mainly due to financial reasons. A market source commented that interest rates stand at around 23-25 percent, higher than profit margins. In such a situation, the producers, who are not eager to additionally cut utilization rates, remain present in the export markets, though export prices for them are at least $200-210/mt lower than domestic prices.
In the domestic market, Russian producers announced their prices for HR materials for July rolling, with both sheet and coil prices now at RUB 64,500/mt or around $680/mt, both CPT Moscow. In the previous month, offers for HRC stood at RUB 63,500/mt or $675/mt CPT, while HRS was available from mills at around RUB 64,500/mt or $685/mt CPT based on an exchange rate of $1 = RUB 78.5. The latest retail prices for HRS in Russia are at RUB 59,000-60,500/mt CPT or around $624-640/mt CPT, much lower than producers’ prices.
Russian mills continue their presence in overseas HRC markets, despite the tremendous difference between the export and domestic prices in favour of the latter. One mill is offering sanctioned material for July-August shipments at $460-465/mt CFR to Turkey and the MENA region, while another, a non-sanctioned one, is expected to start offering for August shipment next week with a focus on Turkish buyers. In Turkey, importers are expecting to receive from this mill around $485-490/mt CFR, almost in line with Chinese offers, while the previous sales for July were closed at $475-480/mt CFR. Freight rates to Turkey are at around $20-25/mt, while for the MENA region they stand at $38-50/mt from the Baltic region, sources estimate.
Overall, in the previous round of sales, two Russian mills exported to distant markets at least 110,000-125,000 mt for July shipment. “Exports will remain active because mills [in Russia] do not want to cut production, but the domestic trade is on the slow side and cannot absorb all the volumes and is expected to be this way for a month or two,” a market source told SteelOrbis. One mill is expected to stop one of its HR rolling lines in September for scheduled maintenance and so its export volume in August may be reduced since some of its output will be stocked.
Prices in local currency include 20 percent VAT.
$1 = RUB 78.8
