Posted on 02 Apr 2019
Suppliers of hot rolled coil from Russia and Ukraine have succumbed to market pressure, selling at lower than offer levels in the last week of March. They subsequently decreased quotes accordingly for new availability, Kallanish learns from market participants.
A Urals-based Russian supplier accepted bids at around $505/tonne fob Black Sea, and indicated this as the offer for May-rolling smaller coils. The supplier has been squeezed out of its traditional Southeast Asian export market by regional supplies' competitive offers, and by competitors' ability to supply large tonnages. The mill sold several small lots of HRC to traders last week.
Another Russian producer, with restricted availability and slightly higher quality of HRC, sold to regular Turkish customers in the previous week, and was therefore not in the market last week. The supplier's new May-rolling offers have not yet been voiced and are unlikely to be considered by buyers until a couple of weeks from now. This is when processors will have more clarity about the domestic market dynamic and the lira's strength, sources say.
A Russian ex-St. Petersburg mill supplying mainly northern Europe has also reduced offers to around $505-510/t fob, in line with softening European flat product market sentiment and exchange rate fluctuations, sources say.
Meanwhile, Ukrainian-origin HRC offer indications were at around $500/t fob levels, with one supplier looking eastwards where large consignments were in demand. Bids, however, were significantly below sellers' expectations. Market participants comment that since the company is a regular supplier of iron ore to Asia, it could have a better hand in freight negotiations, lending some leverage to the agreed price. At least one large lot of HRC was sold to Asia by the supplier, Kallanish understands.
Market participants note the Russian domestic market's relative seasonal strength and the moderate volume of offers in the market, despite the contraction in Turkish import demand by almost half in the last six months. High slab offer prices continue to prop up the coil market somewhat, along with intermittent news of iron ore shortages, but overall sentiment remains bearish, sources note.
