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Russian sheet prices soften on wider discounts - 4 July 2012

July is seeing domestic prices for hot rolled and cold reduced cut sheets from major Russian integrated producers weaken for the third month in a row, this time by 0.5-3% from June levels. Although official price lists remain unchanged, almost all major coil mills are charging slightly less by increasing discounts this month, several stockholders told Platts Steel Business Briefing.

In the first five months of 2012, Russia’s steel product output was 7% higher year-on-year, at 26.2m tonnes. Facing unimpressive demand at home, mills opted for concessions on price rather than volume. “It remains profitable to keep capacities utilized sufficiently and have decentish order books. We can still achieve this by backing down on prices a little, if we cannot otherwise fulfill our production targets”, a source at one steelworks told Platts SBB.

NLMK- and Severstal-made 2mm hot rolled sheets are now priced at 22,300-22,400 roubles/tonne ($689-692/t) in Moscow. 1.5mm thick cold rolled sheets from the same mills are available at 25,400-25,900 roubles/t. In Yekaterinburg, thin hot rolled sheets from MMK and Temirtau are being sold at 21,800-22,500. Their CR sheets are priced at 25,300-26,600 rouble/t depending on gauge. Sheets are 600-700 roubles/t dearer than their coil equivalents. All prices include delivery and 18% VAT.

Since June Russian mills have seen their export coil prices hit a low; the domestic market is now echoing the trend. “Steelworks don’t admit it openly, but competition in the domestic market is also very intense”, a southern stockist commented.

In August, coil prices are expected to hold at best, if further declines are prevented. From September, they may start recovering, provided that firms favour investment. “Companies were very tight with money during the first half of the year. Now when the new government has been formed, they regained clarity and confidence. H2 will hopefully see more generous spending”, the source concluded.


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