The CIS export market for scrap remains slow in early March. Steel product demand being unstable in North Africa, Turkish mills focus on finished product sales rather than on scrap purchases. However, low buying activity does not prevent prices from growing, as CIS exporters need to raise them so much. Currently, traders’ quotations to foreign buyers are low and those to domestic plants are high in both Ukraine and Russia. Aggressive policy of local mills, which have spent considerable amounts from stock in winter and are in no hurry to revise offers, do not allow suppliers to attract the material at prices acceptable for them.
In particular, traders from Rostov-on-Don report after they cut quotations down to $315-320/t CPT, close to the Turks' bids of $440/t C&F, suppliers became uninterested in scrap shipments to them.
As Tagmet and REMZ currently set bids at $363/t CPT, exporters' offers are totally uncompetitive now. Thus, companies, which still require new scrap volumes to fulfill previously signed contracts and keep shipments steady, have to set purchase prices for 3A scrap not lower than $339/t CPT. Yet, these levels are the only exception and will be workable within the next few days.
Noteworthy, while some companies did not make deals deliberately last month, having focused on shipments of already sold material to wait till the situation improves, in March they feel a need to replenish cash reserves.
At present, the highest possible bids from Turkish buyers are made at about $440/t C&F Nemrut for 3A scrap with late-March shipment. However, traders are afraid to accept such prices, expecting transportation costs to grow this month. Along with higher prices for petroleum, caused by a boom in oil market attributable to riots in Libya, bad weather will also support the increase in freight rates. In the last week of February, ice-breakers were not used due to strong winds, which resulted in a great sea traffic jam (about 30 ships). Traders estimate it may cause delivery costs to grow by $30/t to $34-37/t, which means $400-410/t FOB given the current bids from Turkey and hardly covers production costs.
Ukrainian exporters are in a more advantageous situation amid lower domestic levels. Inflow of scrap to ports may go up in view of mills’ price changes. Currently, scrap collectors from Odessa, Nikolayev and Kherson buy 3A scrap at $339-345/t CPT, like last week. Traders who have managed to purchase required volumes at that price close sporadic sales at $425-430/t C&F ($405-410/t FOB).
Exporters from St. Petersburg have implemented an unexpected rise in buying prices. So, some of them have even succeeded in making deals with Scandinavian steelmakers. Moreover, growing quotations at ports were also supported by higher levels from competitors who collect the material for local Severstal. So, 3A scrap in the North-Western region is now being priced at $367/t CPT, and even at $377/t CPT in some cases. However, the companies in no need to fulfill previous contracts prefer to stay away from the market and keep their prices at about $356/t CPT. At the same time, there are no talks on sales of March production. Traders report $342/t CPT, which does not allow them to accumulate stocks, as the lowest possible price at ports is $450/t C&F. Only if their offers are $475/t C&F ($420-425/t FOB St. Petersburg), sales of the material bought at $342/t CPT will be profitable.
The segment of container shipping is somewhat more favourable. Traders in this sector report that Indian steelmakers are ready to book shredded scrap from Russia at $470-475/t C&F Nhava Shiva, which corresponds to $430-435/t FOB excl. freight charges.
Noteworthy, Belarus SW is no longer an attractive alternative buyer, considering the increase in purchase prices and the strengthening of ruble.
Given unfavourable situation in longs and flats markets, CIS exporters are unlikely to raise sales to Turkey considerably in the first half of March.
(Source: www.metalexpert-group.com )