Rusmet reported that Semis and scrap prices drop for the shipments to Turkey and Middle East will inevitably pull down rebar prices.
CIS exporters have not changed the quotations yet comparing to February, offering the products at USD 400 per tonne to USD 430 per tonne FOB. But their Turkish colleagues decreased their prices from USD 450 per tonne to USD 470 per tonne to USD 420 per tonne to USD 440 per tonne FOB.
Some Western Europe companies offer rebar for export at EUR 320 per ton FOB which is equal to USD 405 per tonne taking into account recent EUR rate decrease towards US dollar. At the same time domestic EU prices are gradually decreasing to EUR 330 per tonne to EUR 340 per tonne EXW. European sources reported about rebar supplies from Latvia to UK at approximately USD 420 per tonne CFR.
However, rebar prices drop has more fundamental causes which are not limited by raw materials and semis fall. First of all this is global decline in construction industry which causes very low demand for constructional steel. At that spring demand rally expected by many metallurgist has not began and it is not likely to begin in the nearest months.
European analysts forecast further rebar prices decrease in the region. According to their estimations, construction industry in EU countries will pass the peak of the crisis in 2009 and the improvement will start not earlier than in 2010. In particular, Polish constructors report about more than double decrease of projects comparing to last year. Poland is considered one of the most advantageous markets in Europe due to the preparation to the Euro-2012. The biggest slump is noticed in Ireland and Spain.
The inactivity of European rebar market is likely to be a long-term trend in 2009. That is why it can be supposed that new prices increase will start from Middle East countries as in January-February. While local markets are overloaded with products, import volume decreased, and import prices do not exceed USD 460 per tonne to USD 480 per tonne CFR. However, in the end of March and the beginning of April purchases increase can be expected. At least, local specialists think that by the end of March the stockpiles of semis and finished products delivered in autumn 2008. However, till that time the demand will remain insignificant, and the prices will gradually decrease. In the conditions of demand fall in Europe and ME the suppliers will obviously turn towards South-Eastern Asia. But even there the prices have begun to decrease. Particularly, there were reports on Turkish rebar shipments to Singapore at USD 450 per tonne CFR.
According to trading houses’ price lists the price drop is not noticeable. There are damping offers in the market but it is not known how real they are. False metal deficit was created which helps to keeps the prices high. Russia is likely to follow the way of stainless steel: domestic prices will significantly exceed average world prices. Traders risk buying metal at high price and facing EXW prices slump. Banks that credit the traders also risk as the subject of the credit can fall any day. Isn’t this a crisis when it is hardly possible to put your own house in order?