Exporters of CIS longs wish to reverse price trend

Exporters of CIS long products have switched from one direction to another during this week but still remain uncertain about the further trend. Of course, market operators would like to break the downward trend but, comparing prices of early May and beginning of June, the quotations have only decreased.  In particular, at the Black Sea ports the lower end of the billet price range has dropped by $15/t, at the Caspian ports prices decreased by $20-25/t, at the Far Eastern ones – by $10/t. Finished longs prices have declined by $10-25/t.
Market participants believe the next two weeks will show whether the price trend will reverse. The market players actually concede that the prices may grow but they do not expect market capacities to increase. At the moment, semis suppliers are managing to sell out but buyer activity in finished longs sector is extremely weak.

The situation at Black Sea ports has been uncertain in the last few days. At first, bid prices of traders and end-users rose from $450-465/t fob up to $475/t fob. Large lots of billet were sold at $465-475/t fob to Levant countries and Turkey (for comparison, small lots had been sold last week at $480-485/t fob). And producers have tried to put up the prices to $490/t fob seeing an upswing of demand. However, this levels were not achieved and the bids rolled back again to $460-465/t fob.
Mills are currently pursuing the single pricing policy keeping offers in the range of $480-485/t fob. Still, they have been somewhat confused by the fact that Turkish producers (whose moves usually shape the trend) have managed to knock down prices for US and CIS scrap again and have lifted export prices for rebar by $10-15/t simultaneously.

At the Caspian ports, most bids have been at $450-455/t fob. But mills have refused to accept these prices because they could make deals at higher levels by redirecting supply to Black Sea ports. The producers have set their prices at no lower than $480-495/t fob Caspian Sea.

In particular, traders reported that Kazakhstan’s Kasting was offering billet at $495/t fob ($485/t cpt). However, later reports showed that the mill cancelled its offers and left the market leaving nominal prices at $530/t fob ($520/t cpt) and informing that the trade will begin on June 10. So far, buyers doubt that the mill will be able to realize the increase: in the current Iranian market, even transactions at $495/t fob are hard to make.

Demand at Far Eastern ports remains rather weak. Offers of Russian billet to Asian buyers are $500-515/t fob. The bids are by $20/t lower but sellers and buyers have managed to compromise this week. In particular, a few small batches have been booked at $495-500/t fob. In general, market participants believe the SE Asian re-rollers will begin steady purchases if they see that billet prices have touched bottom.  
At the same time, the official export prices for finished longs to non-CIS countries vary in the range of $515-540/t fob, by $10/t lower than a week ago. To Syria, the offers were coming at $540/t fob, to Bulgaria – at about $515/t fob (equivalent of EUR 430/t fob at the exchange rate EUR 1 = $1.2). In one case, rebar was offered to Syria and Jordan as low as $495-500/t fob. However, these quotations have not become wide spread in the market.
Besides, Ukrainian wire rod is quoted at $545-555/t fob, while last week the suppliers set prices in a wider range of $545-575/t fob. Specifically, wire rod of Metinvest International S.A. has been offered to Syria at $545-555/t fob. Channel and beam of Azovstal have been quoted at $595/t fob and $625/t fob respectively.
Jun 12, 2010 07:58
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