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Notably, suppliers from Azov-Black Sea ports have tried to raise quotations of longs by $5-10/t over the week, though they have not made any deals at new prices yet. However, having sold most of August rolling of the material, sellers remain optimistic. Market players say buyers can receive $5-10/t discounts after negotiations, depending on a customer.
Having cut rebar prices by some $10/t last week, Belarus SW has closed sales this week already. Russia’s Novorosmetal is reportedly focusing on domestic sales, so the company will hardly grant any discounts to foreign buyers.
In Europe, CIS exporters of finished longs still face difficulties as competition (with both local and other foreign suppliers) remains tough while demand for the material in domestic markets is still slack. Sellers of finished longs from Ukraine are unwilling to cut offers substantially, being able to sell the material to Middle Eastern buyers at more attractive prices. Deals for wire rod from Moldova SW have reportedly been closed at prices by at least $10/t lower than initial offers.
Meanwhile, exporters, doing business at Far Eastern ports, are keeping prices steady amid favourable situation in the region. Quotations of wire rod from Evraz Holding have been at $700/t FOB for over a month. Notably, the company sells August rolling of the material at this level. Despite the rainy season in SE Asia, prices are unlikely to dip so far. Demand from Asian traders, who buy the products on long-term expectations, for the material with September delivery is expected to stay firm. Besides, CIS exporters’ position is supported by the fact that Chinese exporters are not going to cut export prices soon due to strong demand in the domestic market.
The situation in the segment for structurals is more stable, with no considerable price fluctuations seen for the past two weeks. Notably, the material made to EN standards is offered to European buyers by $15/t higher.
Chinese steel futures rose more than 1 percent to their highest in more than two months on Monday, as demand for long steel products remained solid amid a busier construction sector, pushing up iron ore indexes to their loftiest since May.
The most active October rebar contract on the Shanghai Futures Exchange rose as high as 4,925 yuan per tonne, a level not seen since May 5, before trimming gains to 4,909 yuan by the midday break, but standing up 0.8 percent.
The price of rebar, mainly used for construction, could continue to track higher in the next few weeks, as China accelerates construction of affordable housing units to ease asset prices and boost infrastructure in western regions.
"Traders are upbeat on rebar prices this summer and expect a rise ranging between 100 yuan and 200 yuan per tonne by the end of August," said a steel trader in Shanghai.
"We don''t have any big concerns on fundamentals for rebar prices now, and all we can see is the country is quickening its urbanization and social housing project."
Makers of long steel products in China, the world''s top producer, have boosted the utilisation rate of plants to above 95 percent, according to market estimates, to cash in on strong steel demand and prices.
"Inventories fell a lot last week, propping up investors'' confidence that demand remained quite solid," said Wu Wenan, an analyst with HNA Topwin Futures.
Inventories of rebar in major cities in China fell by 135,820 tonnes on Friday from a week earlier, and wire rod dropped by 41,390 tonnes, data from industry consultancy Mysteel showed.
RESTOCKING BUOYS IRON ORE
Rising steel prices and output bode well for iron ore prices, driving up global indexes to their highest in nearly two months.
"Chinese steel mills might continue to restock iron ore this week while steel prices perform very well, which will keep iron ore prices firm," said an iron ore trader in eastern China''s Shandong province.
Quotes for Australian 62-grade Newman iron ore fines rose by a dollar from Friday to $179-181 a tonne, including freight, said Chinese consultancy Umetal.
Spot offers for Indian 63.5/63-grade ore remained firm at $182-$184 a tonne.
Metal Bulletin''s 62-percent iron ore index .IO62-CNO=MB edged up 99 cents to $174.06 a tonne on Friday, its highest since May 24, and The Steel Index''s benchmark .IO62-CNI=SI rose half a dollar to $174.60 a tonne, a level not seen since May 19.Iron ore swaps continued to fall after recent sharp gains.
The Singapore Exchange-cleared July contract fell 81 cents to $172.19 a tonne, August dipped 87 cents to $170.13 and September declined $1.02 to $168.31.Mr Steu said that in relative terms, 2011 has seen relative stability in steel pricing. After a dramatic run up in late 2010, steel prices have remained within a 15% spread so far in 2011.
He said “Given the wild price swings of recent years, this has been a welcome respite. Our assessment is that the recent relative calm arises from a balancing of positive and negative global drivers. As we move into the third quarter of 2011, we believe these factors will begin to sway towards the positive and towards initially modest, but real upward pressure on pricing.”
He said “Our longer term outlook calls for continued volatility, but an upward trend. There are a variety of factors that have kept steel prices in relative balance, so far in 2011. China’s insatiable appetite for steel continues, but the pace of the growth of that demand has slowed considerably. Given the huge growth numbers of recent years, a slowdown in the percentage increases is not a surprise. However, the relative softening of demand in China is being offset by the steady growth in other parts of the world, particularly Brazil and India.”
He added “China has also recently raised the cost of its electrical power, which will put upwards pressure on its steel pricing, despite the slowing growth in demand.”
He also said “Automobile production cuts and other supply chain disruptions arising from the Japanese earthquake and tsunami have put a damper on steel pricing. While the impact of the earthquake and tsunami on global steel supply and demand forces may be over-stated, it does appear to have had a global impact on bullish steel market sentiment.”
He said “While demand is rising in the US as its economy recovers, this increased demand is being met with ease by the considerable slack remaining in the US production capacity. US mills are coming off of incredible lows and therefore, despite the slack, the growth in demand based on earlier years is considerable. Soon the excessive capacity will be diminished and US steel mills will do everything in their power to increase prices to a level, where they can begin to recoup the past few dismal years.”
He said “Across the Atlantic, Northern Europe is showing steady demand increases, but Southern Europe continues to flounder. For the moment, sovereign debt crisis’ have been held in check and the continent appears set to move steadily towards a more broadly based recovery.”
He said “While short term steel pricing is very difficult to anticipate, our sense moving into the summer is that the positive drivers will begin to win out for a couple of reasons. First, summer is the construction season in most of the Northern Hemisphere and this typically puts upwards pressure on pricing. Second, absent some new major shocks to the global economy, the arrows point to rapid growth in the developing world and steady recovery in the developed world. This clearly suggests an upwards steel pricing trajectory.”
Some re-stocking is likely to occur early in the New Year at service centres across the region. Consequently, steel prices are forecast to climb during the first half of 2012.
Black Sea billet prices fell this week and are expected to fall further as demand shrinks on concerns about the health of the global economy and as tighter credit conditions cut investment in construction, a key billet consuming sector.
Traders quoted Black Sea billet offers at $640-660 a tonne free-on-board (fob) Russia and Ukraine, compared with $660-675 last week.
"The market is bearish; I am bearish," a UK-based billet trader said. "I think we are going to get a fairly substantial correction," he added.
"So we are going to have a difficult time unless the Fed starts pumping money out or the Chinese start spending again."
The Federal Reserve on Wednesday cut its forecasts for US economic growth, but offered no hint of further monetary support, saying growth should pick up soon.
Steel billet demand generally peaks in the spring as construction activity speeds up but the uncertain macroeconomic situation was weighing on steel demand, which was depressed both in the Middle East and Asia, two of the major import markets.
Egyptian buyers were among the few still in the market for steel billet but were not ready to accept the current offer prices, trader said.
As Ramadan approaches demand is expected to slow down further in the Middle-East.
Workers in Muslim countries will be fasting during the religious festivity and this, coupled with hot weather, will slow down construction in Northern Africa and the Middle East.
Demand from China and Turkey was also sluggish."The Turkish domestic market had a boom in May and after the election people stopped buying," said a second billet trader."I think they had indigestion."
Turkey's ruling AK Party leader, Tayyip Erdogan, was elected for his third term as prime minister earlier this month.
Turkish billet was on offer at $650-670 per tonne fob Turkey from $670-690 per tonne last week.
Turkish rebar a finished steel long product fell to $715-720 per tonne fob from $725-735 last week.
"The Turkish are not in a rush to sell as they have got long lead times but I think by the end of next week prices will be coming under pressure," the second trader said.
Prices for scrap, a key long steel products ingredient, fell to $465-470 per tonne cost-and-freight Turkey, around $10 down from last week.
On the London Metal Exchange, the benchmark billet contract was at $550-563 a tonne bid/ask spread, from a close at $558 a tonne last Friday.
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