In the last decade of November after celebrating of Kurban Bayram the Middle Eastern companies after a long pause restarted flat steel purchases. By words of traders the majority of consumers in the region have exhausted their stocks of flat steel, moreover, the buyers prepare for a new celebrative pause which comes in the end of December and lasts to the mid-January.
By the end of November mostly all producers of flat steel products in CIS countries have completely sold their products for December, so the trade was mainly for the steel left at stocks. Recent days steelmakers started to sign contracts for January shipments, and the prices both for thin sheet and heavy plate gained about $10-20 per ton compared to mid-November.
The cost of Ukrainian hot rolled coils comes to the level of $575-595 per ton FOB, and Russian producers offer this products for up to $605 per ton FOB. The major buyers are companies from Eastern Mediterranean region, North Africa and the Gulf region. Turkish companies preferred national production earlier, as with import duty local products were competitive. But in the end of November Turkish producers of HRC increased their local prices to $650-660 per ton EXW (excl. VAT), so probably Turkish pipe manufacturers will be interested in import again. Import duty for them is 5% only.
All Ukrainian producers of heavy plate increased their prices for December-January. Donetskstal, which usually offers the cheapest products, now offers it for $590-620 per ton FOB, and price for heavy plate from Ilyich Steel reaches $640 per ton FOB. The same as for HRC, Turkish consumers were not interested in import much, as they were quiet satisfied with prices offered by Erdemir: $700-720 per ton EXW. But Turkish products quoted not less then $730 per ton FOB for international market cannot compete with Ukrainian heavy plate there.
In general demand from Turkey which is traditionally the largest buyer of flat steel in the region is relatively low now because there are own steel products at local market which are not quite expensive. However, as displayed by Turkish statistics, consumption of flat steel in the country in the first ten months of the year increased merely by 60% compared to the same period of the last year, while production (in 9 months) grew by 40%. As believes Turkish iron and steel manufacturers association, capacities for flat steel production in the country will reach 14 M tpy in 2011 while requirement is only 12 M tpy. It is obvious that the mills started this year will not get to the full project capacity at once, moreover, sufficient part of production (galvanized steel, for example) will go for export. That’s why, as experts from the Association say, the import of flat steel will take place at least till 2015. For 2010 import of flat steel is estimated in 6 M tons, in 2011 it will not change much.
Revival of Middle East market caused interest of Korean and Japanese companies which faced with excess of supply of flat steel in their regional market. By the traders’ data, Korean HRC are offered to the Gulf countries for $630-645 per ton CFR, which merely does not differ from Russian quotations.
Perhaps, increase of flat steel prices in Middle East is not likely to be a lasting one. Consumers and distributors arenot intended to increase the stocks yet and buy mainly to cover their current requirements. Nevertheless, quotations for January will grow for sure.