Potential scenarios on the post holidays longs market

Friday, 25 August 2006 14:20:13 (GMT+3)   |  
       
Mediterranean and Black sea markets have not seen much change over last week where Russia and Ukraine were not really aggressive with exports based on their strong local market conditions. Other markets such as Turkey and Egypt have mostly maintained their last week levels. Prices in the Turkish local market have softened on TRY basis, particulary in Iskenderun region, after Isdemir dropped its prices last week. Prices also softened on US Dollar basis, as the TRY gained some value against USD recently. We must take into account that such price changes are related to exchange rates rather than a change in supply/demand balances. Ex works price for 12 mm rebar in Turkish local market was around TRY 870-910/mt including VAT ($500-520/mt excl. VAT). October shipment Turkish export offers were heard in $505-515/mt FOB range. Some producers were heard to offer $5 below this range while on the other hand a producer was heard to make offers slightly above this range for November shipment. The most active market in terms of exports during August was the UAE. There was also some activity in Israel although at limited quantities. US market appears to have slowed down considerably compared to early summer. Offers for Turkish wire rod remain at $480-485/mt FOB and seem to struggle with China. Turkish producers are in a tough competition with China both in the US and South European markets. We may expect more aggressive offers from them after the holidays aiming to compete with China. On top of that, the new rolling investments due to complete soon may leave Turkish producers in more difficult positions. The strong local market in the CIS is putting pressure on traders doing business in these origins. Russian producers have hiked their local longs prices this week by $10-15/mt. These hikes are obstacles in front of getting competitive offers particularly ex-Black Sea ports for both wire rod and rebar exports. Mittal Steel Kriviy Rih, Ukraine's largest wire rod and rebar producer, continues offering large coil mesh quality wire rod at $455-470/mt FOB level. While offers for Eastern Europe are at high-end of this range, offers for the UAE are heard to be given at lower levels. On the side of rebar, while offers are at around $470/mt FOB, except for Algeria, sales to this country are heard to have concluded at $465/mt FOB level. In Middle Eastern and Gulf countries, where prices registered declines during July, now the prices are following a stable trend. Prices offered by the producers in the UAE are at around $580/mt ex-works on theoretical weight basis. Demand is strong and prices indicate variety in Saudi Arabian market. Prices may decline in a day and may rise in another day. Price levels offered to Saudi Arabian trading firms are at around $558/mt. Egypt's offer for rebar is at around $510/mt FOB, and at around $485/mt for wire rod. Due to the slowdown in the US market and the China factor, Egypt seems to be active mainly in the near markets. There is no significant change in Black Sea and Mediterranean markets compared to last week. Holiday period in Europe is coming to an end and the attention is focused on this market. SteelOrbis has been reported that buyers in the southern Europe have already started negotiations with the producers in the exporting countries, in terms of both wire rod and rebar. The market in southern Europe was quite strong before the holiday period. One of the major factors that will impact the market in September is the stock levels of Europe and that whether the Europeans will be active as expected in the post-holiday period. Another major factor is whether the Chinese prices, which have slightly rebounded, will relieve the producers in Black Sea and Mediterranean regions, by increasing further with the end of monsoon season.

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