The crisis seen in the global financial markets has significantly affected the iron and steel sector. The decreasing trend in the Middle East and European steel markets, which started with the second half of the 2008, is still continuing as end-user demand has failed to reach the expected levels in European and Turkish markets, and also due to the low trading activity seen in the export markets. Furthermore, the substantial inventories of domestic traders and mills in the European and Middle Eastern markets have been attracting attention. The end-users' policy of holding back from purchases or else of just making small daily purchases under the influence of the decreasing trends is also helping to push price levels down further. Meanwhile, the low demand for finished steel products results in reduced demand for billet and in lower billet prices as well.
In the 41st week of 2008, the decreasing trends of both CIS and Turkey origin billet prices showed no difference from the falling trends seen in the last ten weeks. Many mills who produce billet by processing iron ore are not able to compete, while electric-arc furnaces who previously made scrap bookings at high levels, have difficulties in obtaining business.
During the current week, one domestic Turkish mill announced a price of $527/mt + VAT for St37 grade billet. However, the offer in question has failed to attract the attention of domestic market players given the offer levels of ex-CIS billet. Offers for ex-CIS billet have decreased to the level of $450/mt FOB for October/November shipments. In addition, such decreasing prices affect expectations in a negative way, leading to a prolongation of the general wait-and-see mood in the market, and thereby frustrating billet buyers.
Meanwhile, billet prices in the Iranian domestic market have shown a decrease due to weak end-user demand. In the current week, 120 x 120 - 150 x 150 mm sized 3SP/PS and 5SP/PS grade billet produced in Iran have been offered at the level of $760-770/mt ex-mill, for immediate delivery to the domestic market, for cash payment
Overall, semi-finished steel prices are expected to continue their decreasing trend in line with the weakening of finished-steel product prices. With buyers of raw material, semi-finished and finished steel products holding back from purchases for three months now, there appears to be no sign of an end to the prevailing wait-and-see mood in the semis market and for this reason prices look set to continue their downtrend.