Driven by what is described as "very strong" demand from China, prices of slab from Russia and Ukraine are said to be gently firming up. Whilst market participants are careful not to overestimate the upturn, demand does look to be picking up.
February production volumes are now said to have been allocated, a major Russian producer says. China is said to have bought at levels around $370-380/t CFR Chinese ports, mostly from Ukraine. FOB Black Sea prices are $330-350/t, depending on terms of sale and the producer with tonnages having gone to China, Asia, Southern Europe and "a bit" to Turkey.
To large extent, production cuts among the CIS mills that took place last year are helping to keep demand and supply in balance, traders say. Whilst Chinese producers have been slow to bring their prices down due to the high raw materials costs they have to bear, their CIS counterparts, with their captive raw material bases, are taking advantage of this current upturn in the market, they says.
"It is cheaper (for Chinese companies) to buy slab from the CIS and get the tolling agreement with re-rollers, than to use domestic slab," a seasoned market observer notes.
The issue of demand for flat products, although questionable, does not appear to be groundless: "Prices have hit the bottom – the slab will not go to waste, it will be re-rolled if not next month, then in a few months' time," another source adds.