Weak demand, competition, pressure CIS HRC prices

Posted on 14 May 2019

Source: Kallanish

CIS hot rolled coil exporters have indicated lower offers week-on-week amid ongoing competition from Turkish and European producers, market sources tell Kallanish.

A Russian producer is indicating readiness to sell at $480-490/tonne fob Black Sea for small and large coils, respectively. This is slightly above some of Turkish offers of the same grade material on a normalised basis. The mill sold large coils to its Turkish mill at $490/t fob at the beginning of last week, but this level is "… not representative of the market," sources say.

Turkish re-rollers meanwhile "… could only book HRC at around $470-475/t cfr, and hence this week booked nothing," having had offers from another Russian supplier at $480/t fob, one source suggests. Another producer is offering HRC to Vietnam at around $520/t cfr for large tonnage of small coils. Vietnam however has not been booking anything amid expectations of the results of US-China trade negotiations, sources say. 

A Ukrainian producer did not sell any HRC this week, having booked some tonnages to Turkey at $485-490/t cfr in the beginning of May. The producer's June crude steel output will be lower due to maintenance on one of its converters, and as such it is not pressed to sell more, sources says.

Meanwhile, another Russian producer has closed its May-rolling allocations and is offering its HRC at $480-485/t fob St. Petersburg, but may accept firm bids at slightly lower levels, according to one trader. This is amid intense competition with European mills, he says. The recent news of substantial production cuts in Poland, one of its main markets, could support current price levels. Some traders opine nevertheless that the announcement of imminent price increases of up to €30-40/t ($34-45/t) by a major European producer was too early after the cuts to have tangible effect on the market.

After a holiday lull, market participants anticipate bookings next week, supported by the possibility of renewed Asian demand, and the possibility of higher prices in Europe, traders say. The rise in Chinese futures' prices after several days of falls may also be a positive influence, but "… frankly, the market is more in the flux than it has been prior to the negotiations," traders note. Most traders say they have closed all positions and are waiting to see how the market reacts next week to the flurry of recent news. 

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