/Rusmet.ru, Victor Tarnavskiy/ Real demand for flat steel in ME countries remains rather low due to Ramadan which is to finish on Sep. 9. However, local traders started the purchases as early as in the end of Aug, relying on consumption growth in the last months of 2010. This allowed the suppliers from CIS to increase the prices for their products by $20-50 per ton as compared with Aug.
Today the cheapest HRC are offered to Turkey by the Ilyich Steel Works of Mariupol, which set the prices of $570 per ton FOB. At the same tome Zaporozhsteel increased the prices for the ME buyers to $590-600 per ton FOB. Russian companies raised the prices to $610 per ton FOB. CRC are offered to Turkey and Mediterranean countries at $690-710 per ton FOB. Basic prices for Ukrainian plate have reached $635-650 per ton FOB. Local manufacturers also increased the prices. In particular, HR steel basic prices of Turkish steel producers have reached $620-645 per ton EXW (without VAT). Taking into account the 5-9% import tax for the products from CIS, Turkish steel is more expensive for the consumers.
In the Gulf countries flat steel from CIS is less demanded due to high shipment costs, which reach $60-70 per ton. That is why Russian HRFC are offered in UAE at the price $660-670 per ton CFR or more. At the same time there is cheaper Indian and Chinese rolled steel in the regional market (about $630-650 per ton CFR). Anyway, the majority of the market participants do not consider these quotation final and expect further prices increase in Sep. Besides, after Ramadan real consumption of steel products in the region, first of all, in Turkey, is to increase.
This year Turkish economy recovers after the crisis. According to the Standard & Poor’s forecast Turkish GDP growth rate in 2010 will reach 6.4 %. Some Turkish analysts say about 7%. Industrial production in May increased by 3.7% as compared with April. In June the growth amounted 2.2% comparing with May. Industrial production growth in 2010 amounts 10-15% over 2009. Unemployment in June 2010 decreased to about 11% (which is the lowest level of 2008). What disturbs Turkish economists is faster import growth comparing with export. In Jan.-June Turkish import reached $99.3 bn having increased by 32.1% comparing with the same period of last year, whereas export grew only by 13.4%, to $66.4 bn. If this trend furthers, the Government can increase import taxes for steel products from CIS in the end of the year.
Nevertheless, the nearest year or two will be advantageous for Turkish market. In other ME countries the growth will be less sustainable, since it will be determined by rather purchases by distributors than real consumption. Besides Chinese companies will be interested in the Gulf region market. Today they do not consider this direction perspective. However, their products at the current prices ($590-600 per ton FOB) can be more competitive than Russian steel