Rusmet reported that while June and the first decade of July flat steel price in Middle East grew for more than USD 100 per tonne. This price hike has been more significant than in other regions largely due to Russian and Ukrainian exporters’ activities.
In the first decade of July Russian exporters offered hot rolled coils to Turkey for USD 530 per tonne to USD 540 per tonne CFR and to Gulf countries USD 550 per tonne CFR. The cost of cold rolled coils has been within the interval of USD 590 per tonne to USD 600 per tonne. Ukrainian steel mills in their turn have also increased prices for hot rolled steel to USD 480 per tonne FOB and for heavy plates USD 450 per tonne to USD 480 per tonne.
These quotations are quiet comparable with the prices from other suppliers. In particular, Erdemir has lifted its domestic flat steel prices three times during June 25th to July 6th totally increasing them by USD 70 per tonne. As a result, the base price for HRC reached USD 500 per tonne EXW. Erdemir export quotations for Europe and Middle East destinations reached USD 520 per tonne to USD 540 per tonne CFR. Iranian and Egyptian products are approximately at the same level. Korean suppliers offer thin hot rolled coils to Saudi Arabia over USD 600 per tonne CFR, September delivery.
The experts explain such a dramatic hike by three reasons. The first is exhaust of stock reserves in the region, the second is a short supply, the third is real increase of demand in several countries, Turkey for example, where economic situation definitely improves starting from April, as well as in UAE, Syria. In the last days Iranian market has also started to recover.
The gap between demand and supply opportunities is rather significant. Some Turkish companies complain they have been able to purchase only 20% of the planned quantity for July to August. Plenty of steel producers are booked with orders till August and started contracting for September and even October. The most critical lack of steel is seen in the galvanized market of the region. Simultaneously, the producers behave carefully and don’t plan to expand an essential output at least till September. Consequently the market for the nearest few weeks to stayed short of steel.
It should be noticed that the major purchases are still conducted by traders rather than the ultimate consumers, and this fact worries. It is expected distributors to leave the market after purchases will have been made and it caused the activity to fall hard. However this problem is actual for the international flat steel market in total, not only for regional one.
Flat steel prices are likely to keep growing in July to August despite real demand level unless steelmakers and market experts keep hope for economic recovery and return of the ultimate consumer to the market in September to October current year. If the expectations come true, the desired increase will go on, though with low bookings of capacities. But if the expectations for autumn fail, the market faces new drop with possible reveal of prices to the level of October to November 2008. Thus, steel companies should be holding careful policy before the situation becomes clear and shouldn’t spend for return idle lines into operation, which can stay out of demand again.