While the prices continue to drop in the Russian domestic rebar market, the market conditions are becoming more favorable for Russia's domestic producers.
In September, the Russian domestic market was characterized by a continuous price drop in the retail market, which was determined by the price reductions of both rebar importers and domestic producers at the beginning of the month. During the month in question, rebar prices decreased by Ruble 1,200-1,500/mt ($48-60/mt) in the retail market to about Ruble 21,200-24,600/mt ($850- 986/mt) FOT, including VAT, depending on the delivery region - thus beating the record decrease registered in the month of August. Currently, the price level in the Russian domestic market corresponds to the level of the beginning of the year.
It seems that the domestic producers have followed the right strategy; by lowering their domestic prices, they have been able to push the importers out of the Russian market. An additional factor in this situation was the increasing freight rates which made it less advantageous for importers to supply their materials to the Russian market, forcing them to search for sales markets elsewhere. As a result of the considerable decrease in rebar import volumes, market players report that the equilibrium of the market has improved, and that this has been more favorable for the domestic steel mills which in September were able to up their domestic deliveries. Currently, non-CIS origin rebar is almost absent from the market, while the non-CIS offers which are still being made have to be at prices below the Russian producers' levels in order to achieve some sales.
In October, retail prices are set to continue dropping, pushing imports out of the market completely. As per the announced prices, the Russian domestic rebar producers have reduced their October domestic prices by 8-12 percent, depending on material and delivery region. The decrease in prices of imported materials from the rebar producers of other CIS countries is not so large, only about two percent.
With such a decrease in Russian producers' price lists, it is doubtful that imported material will be able to compete in the Russian market. Therefore, a further decrease in imports, followed by greater market stabilization, can be expected by the end of the year.