CIS coils gain traction in supply vacuum

Posted on 13 January 2020

Source: Kallanish

The CIS hot rolled coil export market is quiet with only Ukrainian material available. Russian mills are not offering due to limited availability of February-rolling material, which they are directing to the domestic market.

One Russian supplier is citing reduced availability by -50-60% compared to traditional March rolling volumes, which would be ready for loading in Novorossiysk port from mid-April. Another, ex-Baltic supplier is withholding offers in expectation of more clarity next week in the European market, its main target market, Kallanish hears.

The shortage is mainly on the back of a major Russian Urals-based mill's final stage of small coils rolling mill upgrade, which is expected to last for the whole of spring. The producer issued a letter to its customers in December, informing them of the absence of export allocations from March to June. The estimated 250,000 tonnes/month of consequently reduced production practically rules out Russian mills' presence in the export markets in the next few months. Domestic markets are expected to absorb all of the available volumes.

In the case of tonnages becoming available from March-rolling books, traders talking to Kallanish expect prices to start from $500/tonne fob Black Sea. One source says Russian mills “…have no intention to consider any number starting with ‘4’.” This vacuum leaves only the Ukrainian supplier in the market.

Ukrainian HRC has already achieved $500-505/t cfr in the Middle East and North Africa last week, but these levels are likely to be exceeded in the nearest term, sources note. Ukrainian offers to Turkey at around $500/t cfr did not gain traction last week. But Turkish buyers are expected to return to the market this week, having assessed their domestic and import supply pool, which, according to sources, is limited.

As the European market is expected to also gain more clarity this week, traders are expecting increasing activity from mid-week, as buyers will be trying to source import material. But supply is tight not just from CIS, but from other suppliers, such as India, Egypt, and mainly Turkey.

Indian mills are not offering export tonnages as they are serving materialising delayed domestic demand. Turkey is sold out of export allocations until March, and Egypt's offers are expected to be tabled at around $515/t fob minimum, according to sources.

The Southeast Asian market's ongoing strength is a bonus in this situation, but there is no consideration of CIS material in the region – “…its simply not available," a trader says.


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