CIS steel billets trading dull on weak fundamentals: MEPS

MOSCOW (Scrap Monster): CIS steelmakers are divided over the outlook for offshore trade in the near term. Tonnages designated for overseas sales remain limited. Buying sentiment is not expected to improve in June. CIS traders, operating in Black Sea and Caspian Sea ports, report that trading volumes have been unsettled by weak market fundamentals and negative price expectations, according to a report by MEPS International.

Domestic billet selling figures in Turkey declined by 2.4 percent in May. Business confidence has been undermined by the EU’s on-going sovereign debt crisis, mediocre construction activity and declining finished steel product quotations. As a result, internal re-rollers are in no immediate hurry to enter into negotiations with their foreign suppliers. Pressure is mounting on integrated mills to instigate production cuts. Most have found it difficult to redirect billet material to alternative markets.

The outlook for the Emirati market has shown little signs of improvement. Importers are reluctant to enter into negotiations with foreign sellers. Downstream demand for finished steel is forecast to slow down in the July/August period, due to the summer season and Ramadan. Foreign suppliers have resisted offering discounts and more favourable payment terms, fearing such measures would be counterproductive and only fuel further price instability.

The trading environment remains challenging in Iran, amid subdued demand from construction companies. Local re-rollers are only purchasing small volumes at any one time. This trend is expected to continue until the government’s new fiscal budget is fully implemented. It is also still difficult to finance purchases, due to the international banking sanctions against the country and tight domestic credit conditions, MEPS International report added.