In the southern European and Turkish import flats markets it was expected that price levels, which had begun to soften by the middle of July, would increase gradually after the Europeans' return from their holidays. However, due to the commencement of Ramadan and the further drop in demand the price decline trend has registered an acceleration.
In southern Europe, demand is low and so buyers, affected mainly by the weak demand in their domestic markets, are in wait-and-see mode. Due to the anxiety over a possible further drop in offers levels, southern European buyers are not expected to start making purchases for the time being. In the Italian market, with Ilva's expected price announcement for Q4 not yet having been issued, the most recent base price of HRC was €770/mt ($1,101/mt). However there are predictions that Ilva will be able to sell HRC at around the level of €720/mt ($1,030/mt). Stockists are currently offering imported materials to the Italian domestic market at the level of €720/mt ($1,030/mt) loaded truck. Export offers from Libya to Italy are standing at around $950/mt FOB; however, demand is unlikely to be seen at this level. Meanwhile, very different prices are being offered by China, with offers for HRC being heard at below the level of €630/mt ($899/mt). Although the Spanish market is characterized by nearly the same conditions seen in Italy, it is heard that ArcelorMittal is offering at a base price of €720/mt ($1,030/mt) ex-works in Spain.
A similar situation to the above is seen with regard to the Turkish market. Against the background of weak demand seen in Turkey, traders are not yet expected to start importing material. Import offers to Turkey have been deteriorating since the middle of July. Even Ukrainian steekmaker Ilyich has overhauled its hot rolled mill due to the slow demand. At the same time, Ukrainian producer Zaporizhstal began maintenance work at its production line, but restarted production in early September. Offers from Ukraine to Turkey for both HRC and plate are maintaining their softening trend, due to the high level of stocks in Black Sea ports and the low level of demand. The most recent offers from Ukraine are standing at the level of $860/mt CFR Turkey. Russian mills have not issued official price lists for two months now and are offering according to the demand level. Taking into consideration that the prices issued by Russian mills in July were in the range of $1,240-1,270/mt, the most recent offers at $950/mt CFR Turkey give a good indication of how far prices have dropped. Erdemir has issued prices for excess stock materials instead of changing its list prices in the Turkish domestic market, which has seen a softening in regard to flat steel products from the middle of July on. Erdemir offered its HRC at the level of $920/mt and its CRC at $1,040/mt in the first week of September; the producer then lowered its excess material prices by $40/mt on average during the following week. Even though a slackness is now seen in Turkey's domestic market under the influence of Ramadan, the demand in the domestic market is expected to rise gradually after the conclusion of Ramadan.
It is likely that buyers will continue to wait until the demand sees an increase in the southern European and Turkish markets.