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Semis and longs follow divergent trajectory in Turkey and Black Sea

Steel News - Published on Fri, 05 Oct 2012

Long steel price has been bench marker of the market temperament giving a feel of the direction. Traditionally trend in this product has set the tone in flat as well. Accordingly the movements in this segment have been of avid interest.

Global steel market has going through recession in communion with the economic crisis across the regions. For a change the nations across the globe remained homogeneous in deepening economic crisis which had fallout on the steel and raw material prices.

Even though there have been localized aberrations with occasional blips pattern has been uniform. In diverse context billet and rebar prices the two vital indicators of steel market trends have followed the dotted lines. In a product specific context both have followed a divergent pattern in Black sea and Turkey to give an idea of the localized factors.

The following tables bring to the fore billet prices in Turkey and Black sea separated which progressively widened as the Black Sea mills lost out to the Turkish mills. Even though the trajectory was descendant in both the regions the widening gap can be imputed to the geographical distance and ensuing gap in lead time for delivery. Turkey being close to Iran and UAE the two main consumption points for billet enjoyed a natural advantage. Moreover the payment issues with Iran were deftly handled by the Turks by agreeing for payment in Rial rather than insistence on USD.

In poor market buyers normally tend to hedge their losses by following a wait and watch policy and maintaining low inventory levels. Hence proximity to the Gulf market favored Turkish mills maintaining edge over the Black Sea. Turkish mills dependence on Black Sea billets rather than producing owing to narrow gap between scrap and billets kept the their offer levels elevated.

However the same pattern is not replicated in finished products owing to more availability and stiffer competition from local products in UAE. More over aggressive offers from Chinese and even Italian and Spanish mills in Northern African and Middle East kept any such upswing at bay.

PeriodTurkeyBlack Sea
1st Sept570-580555-565
15th Sept 565-575530-550
30th Sept 540-550505-520

Change in USD per tonne

PeriodTurkish Black Sea
1st Sept600-620600-620
15th Sept 600-610595-610
30th Sept 580-590580-595

Change in USD per tonne

Source - Strategic Research Institute
Posted By : admin on Fri, 05 Oct 2012
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