After successful sales of CIS square billet in the Azov-Black Sea ports at the beginning of the week, more and more traders become convinced that prices have already passed their peak levels. So, all the parties involved have decided to switch to wait-and-see mode until the situation becomes clear in mid-May. Quotations of square billet still grow in the Far East, due to firm demand from buyers and limited availability of Russian semis. In the Caspian region only resellers raise prices now. Trading of June production will start there in the middle of May only.
At the same time, exporters in the Azov-Black Sea region have been raising their prices too fast seeing somewhat stronger demand and intending to stimulate sales further due to limited supply of the semis. However, the much weaker euro against the US dollar and fears related to a possible slowdown in the world economy due to high cost of raw materials and thus lower prices for oil have taken their toll. Quotations of raw materials and steel products leaped largely in view of revaluation of the European currency, and now it will be hard to sustain the growth.
Prices for scrap are expected to rollback next week already, which will prompt a drop in billet prices. Besides, most of trading companies have already booked enough material and do not need to make any more large-scale purchases. At the same time, demand from the Middle Eastern, North African, South American and Asian re-rollers is not strong enough to support the upward trend, especially in view of the fact that the rainy season starts in SE Asia in summer and Muslim countries celebrate Ramadan in August. Nevertheless, market participants keep hoping for the best, as Iranian buyers are expected to show firmer demand for billet in the next two weeks, thus helping to prevent a slump in prices in the short term.
So, most suppliers have left their prices unchanged after a number of deals on square billet at $640-655/t FOB Azov/Black Sea at the beginning of the week and their quotations are mostly nominal now. Nevertheless, Belarus SW has closed sales of 5,000 tonnes of billet to be produced in June $13/t above the prices announced in early May.
However, not all the producers have been so lucky. Elektrostal has returned to the market in mid-May with an offer of 5,000 tonnes of billet to be produced in early June at prices by $40/t higher than in the second half of April, intending to sell the material at highest prices possible. However buyers will hardly accept this level, in the wake of recent events.
( Source: www.metalexpert-group.com )