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Flat steel prices grow in Middle East

Price increase for steel products in Middle East has affected not long products only. Exactly before Ramadan the cost of flat products has also moved up. The suppliers having finished forming order book for August started to offer flat products by September contracts with quotations at least USD 20 per tonne higher.
Russian hot rolled coils with delivery in September are offered to the buyers in Middle East for USD 580 per tonne to USD 600 per tonne FOB cold rolled coils may exceed USD 740 per tonne FOB. Prices for Ukrainian hot rolled material gained to USD 560 per tonne FOB and over. Moreover, Ukrainian heavy plate price increased to USD 620 per tonne to USD 640 per tonne FOB, while in August Donetskstal put its base price at USD 580 per tonne FOB level. A growth is observed in Turkish local market as well. Local companies lifted base prices for HRC to USD 630 per tonne to USD 640 per tonne EXW. Export quotations of Turkish producers are USD 600 per tonne to USD 630 per tonne FOB.
The price increase has been facilitated by 2 reasons. The first is there was some revival of demand in the countries of the region just before Ramadan. During recent two month the majority of consumers mainly used their reserves and now its time to replenish. The second is suppliers performed an adequate policy many of them purposefully restricted supplies. As a result, there is even a little shortage in the market. As substantiation for increase of their quotations steelmakers noticed first of all price increase for steelmaking raw materials iron ore and steel scrap in Q3.
Cancellation of VAT return for export of a number of steel products from China and rise of prices at local market led to merely complete fade of Chinese steel from Middle East market. Simultaneously some Indian suppliers try to occupy Chinese niche, offering hot rolled coils to the Persian Gulf countries for around USD 620 per tonne to USD 630 per tonne CFR. Similar Russian material is offered for USD 640 per tonne to USD 660 per tonne CFR.
By analysts opinion prices for flat products in Middle East Countries will keep growing. Some companies from Europe and East Asia put quotations for hot rolled steel for September at USD 680 per tonne to USD 700 per tonne CFR level, though there are no deals on such terms. The process of stocks replenish in the region has only started so demand may remain good while several next weeks. In autumn it is also expected an increase of real demand, first of all for cold rolled steel and steel for construction, tube and pipe manufacturing. But this growth is not likely to be long. Real demand hasn’t revived to the before-downturn levels yet and consumers as a rule keep a careful policy, holding away from purchasing huge lots. However perspectives for the rest of August and early September seem quite favorable for exporters from CIS.

Aug 18, 2010 08:20
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