A surge in buying activity in the CIS longs market, seen in early June, has given place to a lull. Thus, by now it has become clear that the upward trend has dried up and mills will have to back down. The trend reversal is not attributed to worse demand for longs in the export market, but to suppliers' increasing prices too fast. Buyers have turned out to be not prepared for such high levels and have adopted a wait-and-see attitude, thus putting pressure on producers.
Whereas prices for wire rod have not changed much, quotations in the rebar segment have plummeted. In particular, CIS sellers have failed to set rebar prices in the Azov-Black Sea region at $750-755/t FOB – quotations have dropped after reaching $720-730/t FOB.
Thus, on June 6, BMZ, inspired with successfull deals of its fellow exporters, tabled a $70-75/t gain in prices for July-early August rolling of rebar compared with the levels of the second half of May. Yet, the supplier has been forced to retreat, getting no response from buyers. Such actions have only confused the buyers, and other exporters could not help their prices from falling.
Novorosmetall, having sold rebar ex-warehouse at $670/t FOB two weeks ago and June output – at $685/t FOB, mainly to Africa and Syria, has reportedly started offering July production at $695/t FOB.
Meanwhile, ArcelorMittal Kriviy Rih, having closed a deal for small quantity of rebar at $730/t FOB early this week, has raised its offers to $750-755/t FOB and has not revised them so far. However, taking into account the latest sales of Novorossmetal and the fact that BMZ offers have gone down to $690/t FOB and are expected to lose another $10/t, ArcelorMittal Kriviy Rih will be forced to make reductions.
The situation in the wire rod segment is more stable and the prices have even increased this week. Thus, contracts for Ukrainian wire rod have been made at $750-775/t FOB, but the deals at this level have been sporadic. Currently workable level is $750-760/t FOB. Although buying activity has slowed down by the end of the week, suppliers stay calm and keep their prices unchanged.
Trade in the EU market remains sluggish. Moreover, though euro has strengthened against the US dollar, it is not enough for offers of CIS products to look attractive to this destination. Demand for rebar in Eastern Europe has somewhat improved, so sellers have good chances to boost sales if they stick to a flexible price policy. Still, taking into account that buying activity has slowed down in wire product segment, entailing a price decrease, European customers will probably insist on substantial discounts from producers of mesh-quality wire rod as well.
BMZ, having lifted rebar quotations by EUR 60/t on June 6, has halved the increase. At the same time, offers of long products from ArcelorMittal Kriviy Rih to Romania have stayed unchanged, after a EUR 15-45/t gain within a week.
Meanwhile, CIS exporters have strengthened their positions in the Far Eastern region, taking advantage of improved demand for wire rod in SE Asia. Suppliers have also benefited from Chinese producers raising prices for the product by $10/t in a week. In particular, deals for July wire rod from Evraz Holding have been reportedly closed at $725/t C&F ($700/t FOB), which is by $5/t higher than end-May figures.
Sellers in the stricturals segment have also made an attempt to push through an increase when offering July production. In particular, angle, channel and beam of CIS origin are available to overseas buyers at the price $15/t higher than two weeks ago.
( Source: www.metalexpert-group.com )