During the current week, which has seen the celebration of Orthodox Christmas in the CIS markets, countries in Europe have just returned to work, while China has been on an upward trend and signals of a recovery have been coming from CIS countries. In China, where producers have cut production and the government has abolished export taxes due to the contraction of domestic demand, export offers for flat products have finally increased on the back of recovering demand. On the other hand, China's hot rolled coil purchases from abroad have been continuing. In the last days of 2008, a booking from Ukraine to China was heard to have been concluded. Chinese buyers are currently looking to conclude import deals for HRC, for February shipment in particular. It is thought that the maximum acceptable levels for China are at $410-450/mt CFR. The latest HRC offer given from Kazakhstan for the export markets was at the level of $420/mt FOB.
Last week we mentioned the import policy change in Turkey. Against the background of the demand shortage seen in the local market, import tax rates have been increased for flats. The adjustments are as follows; from five percent to 13 percent for HRC, from six percent to 14 percent for CRC, from 14 percent to 15 percent for HDG, and from 12 percent to 15 percent for color coated coils. The response of the Turkish domestic market to the import tax changes has already been seen in the current week. As mentioned in our most recent Turkish flats market analysis (Wednesday, January 7), prices have increased and demand has shown a small recovery in the domestic market. However, since the CIS countries are still on holiday this week, it is still not clear how producers in these countries will react towards the Turkish market. Next week, we will hear the CIS mills' new price offers, which are expected to increase on the back of sales concluded to China and India. The European mills are also waiting for the new offers from the CIS. It is thought that the European countries may seek to sell to the Turkish market using their new tax advantage. However, the new price levels of offers from CIS countries will be decisive.
On the other hand, silence predominates in the European market since the holiday has only just come to an end. The Europeans will see how the land lies in the market in the coming week. Demand has shown a gradual recovery, though it will be clarified in the week ahead whether this demand is genuine or only consists of inquiries aimed at feeling out price levels. Firms operating in the white goods and automotive industries in Italy have started their price negotiations for purchases to be made in March. Meanwhile, as another significant development, HDG demand is heard from Australia, particularly from that country's construction sector. We can say that the HDG offers given in particular from the UK and US have been accepted in the Australian market. In the Italian domestic market, sales prices of HRC from stockists are at €370-380/mt ($271-279/mt) FOT, remaining unchanged as compared to the pre-Christmas period. With regard to Portugal, stockists' prices have significantly decreased compared to before the holidays. Hot rolled coils are in a price range of €460-480/mt ($337-352/mt) ex-warehouse from stockists in this country.
Looking at Eastern Europe, base prices of flat products have shown a decrease of €20/mt ($15/mt) in Poland. Base prices are at €370/mt ($271/mt) for HRC and €450/mt ($330/mt) for CRC, whereas base prices of HDG are at the level of €490/mt ($359/mt) in the market in question. All prices are excluding extras. The holiday period will be over in the coming week in Romania, after which buyers in that country are expected to commence purchases, especially from the CIS. However, for now no recovery is expected in demand levels in the Romanian domestic market. On the other hand, Bulgarian producer Kremikovitzi has been offering hot rolled coils from its stock to the export markets at around the range of €350-360/mt ($253-264/mt) FOB Burgas.
As for the Middle East, the markets here are also characterized by inactivity. This week, hot rolled coil offers given from South Africa to the UAE have been at the level of $450-460/mt CFR Dubai. Although for the time being it cannot be said that there is demand for these levels, a booking of 50,000 mt of HRC has been concluded from Saudi Arabia to Dubai. Meanwhile, it is expected that price levels will go up in Saudi Arabia. In Lebanon, market players have been waiting for new offers to be given from the CIS countries. With decreases observed in stock levels, we may start to hear purchases from this country within one or two weeks
The difficulties in the finance markets have been the source of most of the pressure on the steel markets. Delays, even of one or two days, in obtaining credit from the banks have left both buyers and sellers in a difficult situation. Once the circulation of money in the markets increases and banks become more willing to issue credit, increased activity is expected to be observed in the markets, which are certain to show greater clarity.
€1 = US$1.3640