Middle East long products market in the end of October and the beginning of November reduced to few countries. In the Gulf countries most consumers preferred to buy small volumes of rebar of local origin. The distributors kept the stockpiles volumes at rather low level trying to avoid products excess in stock. In Egypt the activity in contraction industry decreased to the minimum before the Parliament elections scheduled on November 28 and December 5. It is expected that the Government will announce the construction project investment plans for 2011 only after the elections results. The Eastern Mediterranean countries buy limited volume of products. Local consumers still do not feel long products shortage and keep waiting.
That is why main demand for rebar and semi products in the region was located in Iran and Iraq. Iraq has minimal capacities for rolled steel manufacturing. Thus it has to satisfy its needs in construction steel by mans of import. In Iran construction sector is growing today due to significant Governmental investments. Rebar prices in Iran are higher than in other ME countries and reach $820-850 per ton EXW, although they somewhat decreased comparing with the beginning of the third decade of October. At that due to high tariffs to electric power in Iran, mini-mills reduced steel output. It caused the demand increase for semis that was satisfied at the cost of supplies from CIS and Turkey.
On late October – early November semis prices of Russian and Ukrainian origin exceeded $540 per ton FOB when exported through the ports of Black and Azov seas. In Iran, where most of these products goes, the prices reach $590-600 per ton CFR. The prices of semis from CIS amount about $555-565 per ton CFR for Turkish buyers. However, the demand for them is minimal. Turkish companies offer their products in domestic market at $555 per ton EXW (without VAT).
Turkish rebar prices for Iran and Iraq are also at rather high level ($600-610 per ton FOB). However, beyond these two countries these products are not demanded. Thus the buyers in Gulf countries refuse to buy these products even at $590-600 per ton CFR. However, Turkish manufacturers are still satisfied with the current situation. Due to the sales in two neighboring countries and in domestic market they are supplied with the orders for next month. Besides the prices increase allowed them standing recent increase of scrap prices, which grew to $375-380 per ton CFR by the beginning of November. Some companies offer rebar in eastern Asia countries at about $600 per ton FOB, although most buyers consider such prices overstated.
Long products prices growth in Middle East makes certain expectations in the region, although the prices grow in few countries only. Thus rebar exporters from CIS rely on the prices increase on December contracts to $570-580 per ton FOB as compared with $555-565 per ton FOB in November. Semis manufacturers also expect the prices to be stable in next weeks. Semis offer volume is limited and there is semis shortage, although the demand is not high.
The “Iran factor” by all appearances will affect the market during short time. It is expected that in next days the buyers will terminate the deals having collected the stockpiles for the future. Obviously, rebar and semis prices will have to be decreased slightly as a response to the exporters. But there are no reasons for significant fall. The manufacturers continue to hope for activity growth in construction sector of the region in early 2011. In this connection they believe that the buyers will return to the market in several weeks. Low volume of the stockpiles can cause long products shortage and the prices jump.