Middle East, CIS trend downward, Europe still strong

Rapid decline in the Far East is decreasing the prices in the Gulf, Middle East and the CIS, by putting pressure on these regions since early July. CIS origin long product prices fell approximately $20 per ton compared to early July's levels. Strong domestic market in the CIS led to high export prices. Currently, domestic market is still strong and this situation curbs the price decline. It is heard that Ukrainian mill Krivoy Rog is offering rebars for export at $450-455/mt FOB, while mesh quality wire rod export offers are at $460-470/mt FOB. There are not many export offers from Far East ports since CIS origin products can not compete with the Chinese origin product prices. The products that would have normally been offered to Far East are diverted to either the domestic market or to Black Sea ports. This situation increases the pressure on CIS origin long products at Black Sea ports. Moreover, the domestic market prices that are in better condition than export prices, may cause a slowdown in the domestic market prices in the coming months, due to increasing long product supply in the domestic market. Turkish origin rebar was generally at $515-520/mt FOB on actual weight basis this week. The stagnation in domestic market, the attacks in the Middle East, the slowdown of purchases in the Gulf region and the decline in Euro/US Dollar exchange rate seem to affect the Turkish mills. The mills are still finding the best price in the US; however, purchasing also seems to slowdown in that market. Although the domestic market is in good condition in the Southern Europe, especially in Portugal and Spain, rebar offers are at around $550-555/mt CFR. The increase in prices of mills in Baltic enabled Turkish mills to conclude sales $5-10/mt higher than the general level to the United Kingdom. Of course, the tonnages, which were sold here are limited, are not reflecting the market entirely. Wire rod pricing trend is also showing a slowdown. Offers heard for mesh quality wire rods in the market are at around $495-500/mt FOB Turkish ports. September shipment Chinese origin wire rod offers at $490-495/mt CFR in Southern Europe ports put Turkish mills' businesses in Europe to difficulty. Chinese mills are putting pressure on both Turkish and CIS mills in Gulf. Rebar prices are strong in Southern Europe before the holiday. The prices in Italy are in a range of Euro 440-445/mt ex-works, while mills in Spain raised price level of AENOR-certificated 12 mm thick rebars to Euro 555/mt delivered to warehouse. Expectations for market players in the Southern Europe are generally favorable. Most of the trading firms consider that they will face a firm market in September after the completion of holiday period. This expectation causes a variety in price movements in other Mediterranean countries of Southern Europe. If the prices continue to decline in other regions during September, Southern Europeans may meet a surprise after the holiday period. On the wire rod front, Chinese mills and trading firms sold a lot of wire rod cargoes to the Southern Europe for July delivery due to the anxiety for the possible tax rebate in exports. Currently, there is quite a wire rod supply especially in Spain and Portugal and this situation affects the market negatively. Moreover, Chinese mills cheap offers for September shipments create a pressure on the market. Long product markets in Old World, except European market, indicate a downward trend. This decline emanates from the rapid decrease in the Far East market. Furthermore, the fact that Turkish mills putting pressure on scrap is accelerating the long product decline. Generally, the expectations still split into two in the market. Some of the market players consider that the rebar activities in Far East will increase towards the end of August and this will also reflect positively to Black Sea and Mediterranean. Also, they consider that Gulf market, which is effective in rebar market, will return to the buying activities with the end-of the summer. There are other groups that expect Far East prices not to indicate an upward trend in the coming months. They also expect European prices, which are strong post-holiday, to show a slowdown.