Russian and Ukrainian hot rolled coil suppliers are set to increase prices for their January rolling schedule offering, on expected buoyant demand and anticipated restricted availability of material.
One Russian supplier has no January allocations except for Turkey, as it gives preference to the higher-margin yielding Russian and CIS market, where demand is exceeding earlier anticipated levels. The mill will also be completing a major revamp of one of its main rolling mills over February-June 2020. This means that there will likely be no export allocation from the mill at all in the first half of the year, traders tell Kallanish.
The volumes lost to the market from the mill are not great, and could be replaced with Ukrainian material, from the recently launched hot rolling mill at Metinvest's Ilyich. This is provided recent issues are resolved which have led to the temporary halting of the facility, they add. The Russian mill's lack of January allocations has already led to enquiries from Egypt, Tunisia, Turkey and Vietnam being rejected, Kallanish understands.
Although no deals were made in the course of last week, strong demand in Vietnam is expected to propel the region's intake considerably. At around a $460/tonne cfr indicative price, Russian and Ukrainian suppliers able to supply required specifications could sell at $415-420/t fob base immediately, traders note. Other regions are also becoming hungrier, including North Africa and Europe, although uncertainty surrounding Ilva's fate is adding to volatility somewhat, sources believe.
Expectations are for CIS suppliers to increase their January rolling prices to by at least $10/t, but sources note this could change provided the market's volatile dynamic and considerable delayed demand re-emerge.