Scrap Metal Prices

Rusmet.ru, Victor Tarnavskiy – Rebar prices increase in Middle East countries was artificial from the very beginning and was determined mostly by scrap prices increase. However, Turkish steel making companies managed to make raw materials stockpiles buying less expensive European material. In the end of Jan. they left the market and terminated the purchases. Scrap prices in Mediterranean went down and rebar could not keep its level accordingly.

First rebar prices fell in Turkish domestic market. The quotations for rebar of medium sizes, which were once $525-540 per ton from the stock (excl. VAT), decreased to $505-525 per ton after a short boost. The demand for construction steel in Turkey shrinked recently due to the cold weather, although the situation in national construction industry is not so bad.

Last week exporters had to reduce their prices. The attempt of Turkish companies to increase the quotations for rebar delivered to Middle East to $540 per ton FOB and more has failed. The consumers did not feel the necessity of urgent purchases of steel products and that is why they could not afford waiting policy. That is why once scrap prices in the region started decreasing; the prices for Turkish rebar fell to about $520-525 per ton FOB.

Now it is semis’ turn. On the wave of long products prices increase, the products of Russian and Ukrainian reached $470 per ton FOB and more. However, the demand for such exercise semis fell at once. To resume the sales, the suppliers will have to decrease the prices to at least $450 per ton FOB.

However, it can be assumed that the decline in rebar and semis markets is temporary. By all appearances, scrap prices can increase once again till spring, pulling steel products and semis. Serious and long-term decline in this market looks unlikely due to continuous raw materials shortage.

However, rebar and semis markets are not ready yet for independent increase. According the specialists the demand for long products in most Middle East is as low as last year. Regional construction companies have many new projects, but they still do not have financing. The demand for rebar is likely to grow in 2010 almost in all countries of the region (Dubai only is behind); but this growth is rather potential than real. The markets are waiting for the signal from the Western countries that the crisis has been passed. This can happen in spring or even as late as in Q3-Q4 of 2010.

Thus, semis suppliers from CIS have to prepare for short-term recession which can switch for new prices increase. They can not affect further events, however. Scrap prices are likely to decrease from the beginning of spring; semis and rebar perhaps, will follow it.

Source: Rusmet.ru