Russian export prices for hot-rolled steel remain unchanged

The Russian export market for hot rolled coil remains subdued due to weak demand from major importing regions, with offers hovering at $540-560/t FOB Black Sea over the past two weeks.

Demand from Russia's main importing regions of hot-rolled steel, namely Egypt and Turkey, is extremely low due to a combination of currency exchange problems, sufficient inventory levels and lack of confidence that prices will recover in the fall.

Although offers of Russian hot-rolled steel have fluctuated slightly over the past three weeks, they have not changed in general, which indicates that the bottom has been reached, and sellers have not yet reduced prices to achieve sales. Sentiment is also supported by a recovery in demand and prices in the domestic Russian market, easing selling pressure and dependence on exports.

This does not mean that the current price level corresponding to the end of 2020 will not fall further as a new round of sales approaches. New sales to the Middle East and North Africa, and possibly Latin America, where Russian firms have been trying to sell in the past few weeks, could be even lower if global flat steel sentiment does not improve.

In Turkey, the main market for Russian hot-rolled steel, buying activity is low and domestic ex-works prices do not exceed $620-630/t despite much higher offers, traders say. Turkish export sales are also weak and a prolonged production cut is being considered. In Egypt, US dollar shortages are crowding out imports from the industrial sector towards food and medicine, delaying projects and lowering demand for steel — a situation that is now broadly mirrored in third world countries, traders say.

The prospect of a recovery in prices for hot-rolled steel remains dependent on the recovery of the Chinese economy, which, unlike long products, is not expected by everyone. On the contrary, most traders expect prices to decline in September in China and elsewhere. Europe may be the exception, and HR coil prices could rise slightly as imports from Turkey and Asia replace cutbacks caused by rising energy prices and a lack of planning ahead.