The number of suppliers offering flats Russian mills will roll in September has increased this week. Ukrainian exporters stay inactive so far and do not plan to come back until next week: they want to determine their prices when trends become more or less stable in the segment. However, the situation will hardly clear up in a few days because quotations of September output voiced by Russian steelmakers prove their intentions to boost export prices despite slack buying almost in all markets.
In particular, a seller of MMK’s flats has raised quotations to non-CIS countries by $25/t for HRC and $30/t for CRC compared to transaction prices for August rolling. At the same time, it intends to implement another $10/t lift. Prices for HR products to the EU have climbed by EUR 10-15/t over the past two weeks. Offers to Iran have grown in the same way – EUR 15/t over the same period. Market players say the supplier has high hopes for the Iranian market as its quotations are reasonable to this destination, especially in view of new prices of Severstal. In particular, Russia’s Severstal announced almost the same price increase as MMK did. The supplier’s prices for HRC to the Middle East, Africa and Latin America have gone up by $25-35/t, to Western Europe – by EUR 5-10/t and to Iran – by EUR 27/t over the past three weeks.
As seasonal factors have now the most significant impact on the situation in the Arab and European markets, there are some doubts the above lifts will be implemented in full. Market participants believe steelmakers will most likely manage only to hold quotations at August levels.
However, Russian producers plan to support their upward moves by cutting supply. In particular, MMK is going to export about 150,000 t of September output of HRC and CRC (against 170,000 t last month). Most of the volume is expected to be shipped to Iran. Russia’s Severstal has decided to follow to the upward trend by lowering exports of HRC to 70,000 t and CRC – to 5,000 t. Reportedly, NLMK does not plan to export HRC at all, since it has switched to slabs after making contracts with SE Asian buyers. Meanwhile, limited amounts of CRC are available to overseas customers, but at quite high prices.
Suppliers from Ukraine, who stay away from the market now, will not cut exports. For example, Zaporizhstal will offer 110,000-120,000 t of September flats output in the foreign market, by 20,000-30,000 t more than in August. In this situation, it is unclear now weather suppliers will be able to push prices up like Russian steelmakers or not. Production targets of Metinvest International S.A are unknown so far.
Nevertheless, even if limited supply were observed everywhere, it would be hard to ensure stable sales. The holiday season in on the peak in Europe, so demand will improve only in late August. Besides, demand for CIS flats has temporarily dropped to zero in most Gulf countries, the Levant and Africa due to both Ramadan and destabilization of the EU and US financial markets. And only Iranian buyers still show interest in deals with some Russian exporters. Although buying activity stays moderate during the religious holidays, Turkish customers do not consider offers of Russian products prices for which are unworkable now.
At the same time, market players hope customers from Latin America and Northern Europe will show some interest in September production from Russian mills. Moreover, these destinations may become the key sales outlets for Severstal’s material this month. However, the supplier will probably have to make reductions to them. Buying activity in Brazil is unlikely to encourage the CIS suppliers on the back of tough competition with local mills.
( Source: www.metalexpert-group.com )