/Rusmet.ru, Victor Tarnavskiy/ Rebar prices decrease from about $540 to $520-525 за т FOB, provided by Turkish companies in the end of Jan. allowed unlocking the market. The demand for rebar in Middle East markets, which almost vanished in mid. Jan. started growing again. This was caused by rolled steel manufacturers in Arabic countries who increased the prices in Feb.
The most significant event was the 7.5% increase by Egyptian EZDK. Its new EXW rebar prices reached $599 per ton (incl. 5% tax). It immediately awoke the interest to new offers by Turkish companies at $530-540 per ton CFR. Besides some companies from Jordan, Saudi Arabia, and other countries of the region have also announced the prices increase. Domestic prices in UAE increased to $530-545 per ton incl. delivery. Today the quotations offered by Turkish companies are not higher than domestic products prices.
Meanwhile, in Dec.-Jan., when Middle East consumers considered Turkish prices overestimated, the traders as a rule kept from imported products purchases. This caused the decrease of stockpiles, which remained excessive for 7-8 months to the normal level (comparing with the consumption volumes). According to some analysts, in case of the rally in construction industry in spring rebar shortage can occur in the region. The shortage can be covered by import boost.
In principle, we should not expect a significant improvement. Winter will finish in less than a month, but global oil prices could not exit the interval $75-80 per barrel. All experts forecast oil prices fall in spring, and consequently, the decrease of export income in oil producing countries. Certainly, the governments of Middle East countries will finance the implementation of the most inevitable projects. However, there will be no expenses similar with those of the before- crisis time.
Nevertheless, the rally in the Middle East market will probably help the metallurgists to cover the influence of scrap prices decrease in spring. Rebar prices are unlikely to increase significantly in March-April. But the manufacturers will be able to count on more advantageous costs - finished products prices ratio.
But high scrap prices are also possible. In recent two or three weeks the demand for scrap fell in Turkey , China, and the USA. However, it almost did not affect scrap prices. In the end of Jan. - the beginning of Feb. Turkish companies bought small volumes of European HMS № 1&2 (70:30) at about $335 per ton CFR. At the same time the quotations for the US HMS № 1&2 (80:20) and Russian and Romanian A3 were $340-350 per ton CFR. In mid. Jan. the US traders quoted their material at $365 per ton CFR. But in fact no deals were concluded on these conditions. As soon as scrap demand increases in some region, the prices will grow immediately. Even the supplies increase in spring, when the weather conditions improve, can occur to be insufficient for satisfying of all requirements of the market. However, in this situation the suppliers arte likely to manage to shift all expenses to the consumers.
The outlook for procurement is rather advantageous. The attempt of the prices increase for Russian and Ukrainian products to $470-480 per ton FOB in the end of Jan. failed, but then the quotations stabilized at $460-470 per ton FOB. The demand for semis remains high in the North Africa and South-East Asia countries. The quotations for the deliveries to Iran grew to $510-520 per ton CFR. In Turkey semis are bought by section steel producers, which is in demand today. There are still no reasons for semis prices decrease.