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Monday Market Monitor - EU (WEEK 42) - Price war commences

Monday Market Monitor - EU (WEEK 42) - Price war commences

Week 42 has seen a further price decrease notwithstanding that Chinese Mills and Traders offers were keeping basically same levels of before holidays.
The widely shared feeling among buyers is that prices have still plenty of room on the negative side and that definitely prices will fall down at least till the levels of last March to May.

Specifically in South Europe, Italy and Spain markets are characterized by an extremely cautious approach of the customers. Many of them, even in front of attractive conditions both on prices and delivery time, prefer to pass and wait next round even though this could mean to loose a good opportunity. The risk is still too high and, more than that many buyers are in situation that does not allow any mistake more. The lack of liquidity, the negative results of 2009 and the extremely tight financing policy of the banking system are all factors that push everybody on the defensive mood.

On the contrary in North Europe there are signs of better situation with prices basically remaining on same level of last week which is a remarkable point in such a general scenario.

1. Plates

It is learnt that some major Italian plate distributors have presented to Ukrainian Mills proposals for buying plates at a price of EUR 320 per tonne plus extras CFR FO Ravenna for lots of 3000 tonnes to 5000 tonnes for December shipment.

Mill's reaction has been so far negative but we believe that it is just a question of time and more than likely short or very short time.

It is learnt that Ukrainian mills are offering plates at EUR 360 per tonne to EUR 365 per tonne CIF FO Mediterranean Sea with 90 days payment,

This is a drastic break through. So far not even Chinese offers were offering below EUR370 per tonne CFR FO.
This step is clearly indicating that we are quickly going to same levels of 6 months ago when HRC were booked at prices below EUR 300 per tonne and HRP barely around EUR 300 per tonne.

HRP
S 235 / S275JR
5-20x2000

Change is on October 16th as compared to October 9th 2009
In EUR per tonne

2. Hot Rolled Coils

As commented last week, prices of HRC prices have gone down this week but the slide has not been as deep as expected by many buyers after Chinese holidays.

Despite buyer's pressure with purchase proposals as low as EUR 345 per tonne to EUR 350 per tonne effective CFRFO, offers from China are made at average prices of EUR 350 per tonne to USD 355 per tonne plus extras CFR FO basis, which is bringing the effective price between EUR 370 per tonne to EUR 380 per tonne CIF FO with LC payment at 90 days.

A relatively small tonnage has been booked as such levels as all buyers are strongly betting on further decreases that combined with a strong Euro (1.49 vs USD), should give them the opportunity of reaching the desired levels. The recent decreases announced by the major Chinese producers for their domestic price lists are a certain indication of a possible next decrease of prices also for export.

On the other hand, CIS steel mills have finally begun to crumble. It is reported that HRC from Ukraine are offered as low as EUR 340 per tonne CFR FO Mediterranean Sea.
Same price is actually offered to Turkey where Ilyich seems to be on the way to book an important order of about 40,000 tonnes between HRC and plates.

It is learnt that HRC prices at Black Sea went down by USD 20 per tonne and Ilyich has offered around USD 480 per tonne on FOB basis to EU clients

Turkey while Russian proposals are seems to be at much more higher levels in the range of USD 560 per tonne to USD 580 per tonne on CFR Turkey basis, although concluded deals are heard to be at lower levels.

The negative trend is transversal to all products, without any exception. CRC and HDG have reached levels that we couldn't see since 1st quarter of this year, with offers coming from FSU and China respectively around USD 600 per tonne and USD 700 per tonne FR FO for CRC and HDG.

Besides the extremely low demand that is persisting all over EU, this can be also considered as the result of the short sighting policy of many mills that have recently re aligned several BF's. We have been easy prophets, when some time ago, we were suggesting that such a decision could have been of serious damage to market balance and possibly breaking the fragile positive trend.

HRC
S235JR
2-12x1000-1500

Change is on October 16th as compared to October 9th 2009
In EUR per tonne

3. Cold Rolled coils

CRC
DC
01
0.60 Avx1250

Change is on October 16th as compared to October 9th 2009
In EUR per tonne

4. Hot Dipped Galvanized

HDG
DX 51 D / Z100-120 / AS
0.55 - 0.57x AW

Change is on October 16th as compared to October 9th 2009
In EUR per tonne

Oct 21, 2009 12:00
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