The March decline in prices for sheet products affecting the markets of East Asia (in dollar terms) of Europe affected the situation of Russian and Ukrainian steel. At the conclusion of the April export contracts they had to make serious concessions in all directions.
To the greatest extent fell Ukrainian hot rolled coil, were forced to retreat to the level of the first half of January and have lost up to $25 per ton compared to early March. Maximum concessions demanded of the Turkish company, which received a wide opportunity for choice between local producers, offered at $625-635 / t EXW for delivery in may, European and Ukrainian rental. To maintain its competitiveness in comparison with the Eastern European hot rolled coils cost about $605-615 per MT CFR, Ukrainian exporters had to drop prices to $545-555 / t FOB.
In other areas of the quotes, however, were not significantly higher. In the Gulf countries the price of Indian and Iranian hot rolled coil dropped to $625-640 per ton CFR, as a result, Ukrainian companies had to agree to reduce the value of their products to about $550-570 per MT FOB or $610-615 / t CFR. On the European market quotations fell due to the weakening Euro, which fell to less than $1,30. Contracts for the supply of Ukrainian products in the countries of the Balkans and Eastern Europe were at $560-565 / t FOB or around $580-590 / t DAP.
Russian hot rolled traded significantly higher, reaching $600 per MT FOB for deliveries in European countries and $570-590 per ton FOB at other areas (except the Far East, where prices were at $610-615 / t FOB at low interest from potential buyers). Russian producers rescued the increased demand in the domestic market. In March, the largest enterprises exported no more than 30-40% of its production, changing the ratio of supply in favor of the domestic market. As expected, in April the demand for flat products in Russia will continue growing.
Serious losses in foreign markets suffered the manufacturers of cold rolled coils in the CIS countries. Ukrainian products also fell to $15-25 per ton compared to early March, to $625-645 per MT FOB, quotations for Russian established in the range of $650-665 per ton FOB. The most stable is the plate steel, for which demand was more stable. The April contracts for the supply of Ukrainian goods to Turkey were concluded at $560-570 / t FOB, which is only slightly different from prices of the previous month.
Prospects of Ukrainian and Russian producers of flat rolled products in the next few weeks can hardly be called favorable. Firstly, we have not stopped the decline in East Asia. In China there is still excess supply of steel products, as a result of local metallurgists have to continue to slow down quotes. Moreover, the negative expectations created among consumers, requiring the suppliers of new concessions.
Second, the events in Cyprus, of course, reduced investment activity in European countries. Financial stability in the beginning of this year was advertised as the main anti-crisis achievement of the European Union, and now it turned out that it is not so. Apparently, the Euro in the foreseeable future will remain relatively low against the dollar and demand for steel products in the region will be limited. And the weakness in Europe and East Asia, obviously, will contribute to the decline of the quotes in Turkey and the middle East.
To prices on flat products on the world market went up, the desired positive changes in the world economy. However, the crisis is still continuing, therefore, to ensure the planned volumes of sales are generated by lowering the cost of production.
Victor Tarnavsky
Rusmet.ru