The position of CIS suppliers, which got complicated in mid-January, has become even worse during this week. On a lack of scrap deals at higher prices in the Mediterranean region, they could not continue the upturn in semis and longs segment anymore amid insufficient demand for the products, despite the efforts to keep it up right after the Christmas holidays. Besides, the rapid surge of quotations has triggered resistance of buyers who expected the upward trend would be developed at a slower pace. Moreover, the fact that Turkish mills have backed down almost at once, moving billet prices down to $660-670/t FOB (-$15-20/t) in a week has not played into the hands of suppliers of Ukrainian and Russian material.
It is obvious that the trend will depend on the situation in the Black Sea region in the next few weeks because Caspian and Far Easter exporters are unable to influence the situation. Besides, Iranian re-rollers are in no position to maintain the upward movement alone, considering that finished product market has just stabilized after a long price crisis. Moreover, gradual cancellation of energy subsidies is resulting in higher production cost in the country. In the Far Eastern market, buying activity is only gaining strength, while Russian suppliers are staying out of the market letting their Asian counterparts lad the market.
The standoff between suppliers and buyers continues. For example, exporters in the Caspian region have reduced their offers by $15-30/t. Producers and traders in the Black Sea ports have been mainly holding their prices so far, giving discounts only occasionally. However, there is a chance that this will become a trend. Moreover, rumors have been circulating that prices have almost reached their peak. However, not all steelmakers find it appropriate to back down: some of them are waiting for new bookings from Turkey and hoping raw material suppliers will bring an upswing to the market. As a result, CIS billet trading has ceased almost everywhere in the middle of this week, as the sellers are adopting a wait-and-see mode in hopes for later higher profits.
For example, exporters from the Black Sea ports announced bold plans to reach $700/t FOB in the short term. Buyers, fearing the prices may go up again, started bidding $620-630/t FOB. Metinvest International S.A. and Mechel have responded by freezing their offers of billet (February casting) at the initial levels set in the middle of last week. However, Novorosmetall has been more flexible. In particular, the producer has reportedly sold a 10,000 tonnes lot with a $40/t discount.
Metalloinvest reportedly has only some of OEMK’s billet (February output) left – about 15,000 tonnes, which it plans to ship to Turkey. Taking into account that Turkish consumers are inactive at the moment, the supplier plans to define prices next week or later.
(Source: www.metalexpert-group.com )