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Will CIS billet exporters manage to avoid further price fall? - 05 Jul 11

CIS export market for billet is still seeing a stand-off between sellers and buyers. Demand in key sales markets remains minimal. Besides, some of July production remains unsold. Suppliers, working from Azov-Black Sea ports continue stirring buyers by means of pricing policy. They are trying to stimulate purchases by talking about semis undersupply and refusing to make reductions. However, this tactics has had no effect yet. On the contrary, they have managed to sell some of July square billet only with $15/t discount. At Caspian ports some exporters were also forced to step back but since the middle of the week buying activity was almost non-existent due to national holidays. Suppliers are in no rush to back down amid stable situation in Far Eastern market, hoping to sell as much semis as possible when Asian consumers become active. Moreover, some suppliers have already started selling August production.
Nevertheless, whereas in the first half of the week market participants were rather depressed, by the end of it exporters in the Azov-Black Sea basin have become more optimistic, seeing domestic prices for finished longs in Turkey heading up. Thus, they will be also able to raise offers due to forecasts of an increase in quotations of import scrap, which they are going to purchase next week. The upturn in Turkish domestic market will surely support the export segment: prices for Turkish semis and longs will at least stop sliding. Moreover, market players still count on sales to Muslim buyers before Ramadan. Thus, whereas in late June CIS billet suppliers made slight reductions to customers, by now they have become inflexible.
By early July square billet quotations at ports of Azov and Black Seas have stabilized at $655-660/t FOB, against $660-670/t FOB last week. Only Elektrostal has left its prices at $670/t FOB. The company has sold most of its August semis back in the first half of June and it is in no rush to sell the rest. For reference, Turkish semis are quoted to foreign markets at $665-670/t FOB ($5-10/t down w-o-w).
Nevertheless, Metalloinvest has expectedly sold OEMK's July output of 150 mm billet at a reduced price of $645/t FOB, $15/t below initially announced levels. The supplier has made concessions because demand for square billet of that size is scarce. However, offer prices have remained almost unchanged, because the company expects the situation in export markets to improve soon.
Noteworthy, Metinvest International S.A. has still allocated a small amount of square billet from Yenakiyevo SW (July casting) for exports (15,000-20,000 t). But the supplier will probably grant discounts during negotiations, especially as it runs out of time to sell it.
 CIS billet exporters in the Caspian region waiting until Iranian buyers start purchasing have mostly preferred to fix prices at week-ago levels, thus showing they are not going to make further reductions. Some market players say this policy has already brought results: about 50,000 t of July billet from Ural Steel was sold at prices similar to initial levels – $660-665/t FOB Astrakhan. However, the success brings some confusion taking into account the fact that other sellers have difficulties selling the material by $10-15/t lower.
In particular, the supplier of semis from Volga-FEST and REMZ who has decided to stick to the level of latest deals ($650-655/t FOB Astrakhan in late June) has not yet managed to resume sales.
Suppliers agree that mass buying may begin next week, but not all of them will be able to avoid price reduction by that time. For example, Kazakhstan’s Casting has delayed negotiations and is now forced to back down: it initially set too high prices for July casting and cut them by $20/t, to $645/t CPT ($655/t FOB) Aktau at the end of June. Yet, buyers considered the drop insufficient. Traders say the supplier has been ready to give additional discounts of $10-15/t by the end of the week.
Only in the Far East suppliers manage to hold prices. EvrazHolding has expectedly begun selling August casting at $660/t FOB Nakhodka. The last tender of Amurmetal has reportedly been closed with a sale of July billet at some $640/t FOB. However, since only large trading companies can participate in a tender of this supplier, prices to Asian buyers will be at least $10/t higher. However, considering that the period of buying activity has coincided with the rainy season in SE Asia, it will be harder for suppliers of the material from Russian producers to keep prices stable in the future. Besides, there are still offers of Japanese semis in the region coming at dumping prices (by as much as $50/t lower than from other sellers).
(Source: www.metalexpert-group.com )
Jul 5, 2011 08:22
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