Posted on 23 Aug 2022
The Russian hot rolled coil export market remains subdued on weak demand from major importing regions, with offers remaining at $540-560/tonne fob Black Sea for the past two weeks.
The demand from major Russian HRC importing regions – namely Egypt and Turkey – is extremely low on a combination of factors, such as currency exchange issues, satisfactory stock levels, and lack of confidence in the rebound of prices in autumn. Even though competing Asian suppliers’ prices are higher, but with longer lead times, the lower priced Russian material remains unsold, traders tell Kallanish.
Although offers of Russian HRC fluctuated slightly in the past three weeks, they have not changed overall, indicating that the bottom has been reached, and sellers are not yet reducing prices to achieve sales. The sentiment is further supported by the rebound in demand and prices in the Russian domestic market, easing the pressure to sell and reliance on export.
This does not mean that the current price level, in line with the end of 2020, will not to decline further as the new round of sales approaches. New sales to the Middle East and North Africa, in addition perhaps to Latin America, where Russian firms were trying to sell in the last few weeks, may be at even lower levels if global flat steel sentiment does not pick up.
In Turkey, Russian HRC’s main outlet, buying activity is low, and domestic price levels are not exceeding $620-630/t ex-works, despite much higher offers, traders say. Turkish export sales are also weak, and extended output cuts are being considered. In Egypt, a lack of US dollars is forcing imports away from the industrial sector towards food and medicine, translating into delayed projects and lower demand for steel - the situation that is mirrored in general in Third World countries right now, traders note.
The prospect of an HRC price rebound continues to hinge on China’s recovery, which, in contrast to long products, is not universally expected. On the contrary, the majority of traders are anticipating price reductions in September in China and elsewhere. Europe may be an exception and may see HRC prices rise somewhat, with Turkish and Asian imports replacing reduced output, forced by energy price growth and the impossibility of planning ahead.
Source:Kallanish
