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Let’s Wait for September- 24 Jul 10

In the first half of July Russian and Ukrainian companies succeeded to lift a bit their prices for flat steel products for shipments to Turkey and Middle East countries. Russian producers now offer hot rolled coils  for $ 560-590 per ton FOB, Ukrainian material is not less than $ 540-550 per ton FOB. Cold rolled coils of Russian production rose to $ 680-700 per ton, Ukrainian are as a rule $20/t cheaper. Moreover, Ukrainian exporters lifted their quotations for heavy plate. Donetskstal mill which traded merchant material for only $ 545 per ton FOB in early-July, now increased its price to around $ 580 per ton FOB for August shipments. At Ilyich Steel heavy plate reached $ 620-625 per ton CFR Turkish port and to $640 per ton CFR Gulf countries’ ports.

As market players remark, the main reason for price growth became a rush to replenish stocks before Ramadan starts. A limited supply has played its role as well, especially cold rolled steel. Finally, a positive impact came from cancellation of VAT refund in China. There is no extra cheap Chinese hot rolled coils in Gulf markets any more.

However, by mid-July prices have stabilized and there is merely no hope for their further move up. Real consumption in the region remains weak both due to seasonal factors and general economic downturn. In particular, pipe manufacturers cut down their strip purchases as they also have problems with sales. Merely all consumers have stocks for one-two months ahead and are not likely to make new purchases for August. Some Middle Eastern companies started to offer its products for September and Egyptian Ezz Steel even for October, but still they cannot boast any sufficient sales.

Turkish market is also mostly stopped in its track. Prices for flat steel products stabilized in early-July and yet remain with no movement while low demand. Cost of HRC of local production is within the range of $ 600-620 per ton EXW (VAT excluded) and traders sell this material for $ 620-650/t from the stock.In general price level in Middle East is lower than in Europe and South East Asia, majority of producers are not waiting for essential sales in August, so its quite probable that quotations remain at relatively stable level during the closest month. Moreover, one can say with surety suppliers will try to hike prices for September contracts. And the matter here is not only in forecasted autumn revival of the regional market. The majority of consumers intent to live Ramadan with minimal stocks so in September they have to make new purchases anyway.

Jul 24, 2010 11:44
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