26th-27th CIS market review: As CIS domestic markets up scrap purchases, export deliveries get tighter

During the 26^th and 27^th weeks of 2007, the CIS export and domestic markets were seen to follow mixed trends. On the one hand, the CIS billets and longs export markets continued to show very weak tendencies due to the low demand in the Middle East and Gulf Region. On the other hand, the CIS flats export market saw some signs of stability as regards CR and plates, but experienced downward movement in HR prices. Meanwhile, though the CIS scrap export market was characterized by a tightening of supplies, the CIS domestic scrap markets were governed by increased activities and prices during the last week of June and the first week of July. As for the domestic flats and longs markets, whereas the Ukrainian domestic markets managed to revive themselves, the Russian domestic markets showed some negative trends. 

Scrap: CIS domestic markets are on the rise

During the 26^th-27^th week period the Black Sea region scrap market was characterized by somewhat decreasing activity levels regarding the purchases of CIS-origin A3 grade scrap. Yet the main reasons for such a trend could be found in both the tightening of supplies from the Russian and Ukrainian scrap exporters (due to the renewal of active purchases by domestic consumers) and the deterioration of the Turkish billets and longs markets. The latter factor played an important part in correcting the A3 grade scrap price level over the last week of June and the first week of July.  On the other hand, the Southeast Asian market registered a slight drop in activity levels during the weeks in question. Yet this did not affect the price level in the region for Russian origin A3 scrap, which retained its high level.

The Russian domestic scrap market saw much activity during the 26^th-27^th week period. Due to the lessening of scrap reserves in the hands of the domestic steel producers, the mills were forced to return to active scrap purchases. As a result, to in order to secure their scrap flow, the Russian domestic steel mills started to hike their procurement scrap prices. Thus, thanks to the domestic mills' price policies and the rising levels of scrap consumption in the country, during the last week of June and first week of July the A3 grade scrap price upped by Ruble 200-800/mt ($8-31/mt) to Ruble 6,200-7,900/mt ($242-308/mt).

The Ukrainian domestic scrap market experienced some rise in both purchases and prices during the 26^th and 27^th weeks as well. As a result of the increasing domestic scrap purchases on the part of the steel producers, Ukrainian domestic scrap prices rose by UAH 5/mt ($1/mt) during the two weeks in question.

Long products: Low demand pushes down prices of CIS billets and longs

Inactivity in the Middle East and European billets markets, together with the deteriorating worldwide longs market and the adequate levels of billet stocks in the hands of producers, all contributed to forcing CIS exporters to decrease their prices by $10/mt over the two weeks in question.

Just like the billet market, the Middle East and European longs markets continued to deteriorate during the 26^th and 27^th weeks due to very low demand. Thus CIS exporters introduced a $30 percent decrease in wire rod prices for all target markets, while a $10/mt decrease in rebar export prices has been reported for the North African market.  On the other hand, due to the scarcity of structural steel, its prices are continuing to show strong levels, rising by $10-30/mt over the two weeks in question.

The general slowdown in the global longs market finally reached the Russian domestic longs market during the period covering the last week of June and the first week of July. The availability of  a wide range of imported rebar and wire rod in the market along with the slight decrease in purchase activities, forced the Russian domestic longs producers to lower their July prices, thus forcing retail prices down slightly during the last week.

Longs in the Ukrainian domestic market recovered some ground during the 26^th-27^th week period. Thus, in the course of these two weeks rebar increased by UAH 13/mt ($2.5/mt), while angle, channel bar and beam showed stronger increases which averaged UAH 20/mt ($4/mt).

Flat rolled: Uncertainty prevails in CIS export markets

The global flats market started to see a slow reactivation during the 26^th and 27^th weeks. There was a mixed trend regarding the CIS flats exporters policies, while some producers lowered their offering prices for HRC & CRC by approx. $5-10/mt, depending on the supply region and producer. Some Ukrainian producers have increased export offerings by around $5/mt. Meanwhile, prices for plates did not undergo any corrections.

The Russian domestic market saw some negative corrections during the last week of June and first week of July. As in the longs market, the domestic flats market is under heavy pressure from imported products, especially from imports coming from neighboring states. As a result, the domestic traders were forced to lower flats prices so as to be able to compete with imported materials. Thus, during the weeks in question, CR and galvanized steel saw some downward price corrections, while HR remained relatively stable.

After showing negative trends for some time, the Ukrainian domestic flat market managed to move towards stability during the 26^th and 27^th weeks. Indeed, even some positive corrections for HR were observed in the Ukrainian domestic market.