CIS longs: Return of export rebar imminent

CIS rebar is still largely absent from the export market despite a continued drop in domestic scrap prices this week from around 14,300-15,200 roubles ($228.93/t on average) to Rbs13,800-14,900.

One contributing factor is the strengthening rouble, but the extent of the fall is indicative of a significant drop in demand in the last week.

The Argus weekly Black Sea steel rebar assessment remained unchanged today at $410/t.

CIS wire rod offers were in the range of $440-450/t fob. No bids were heard this week, but one deal was heard for around 5,000t into southeast Asia at the end of last week at $440/t fob.

The Argus weekly Black Sea wire rod assessment dropped by $15/t to $440/t fob today.

Despite this sale, there is a lack of significant demand for wire rod at the moment, one CIS seller said. Mills are maintaining offers above $440/t fob but if faced with lower bids will prefer to sell billet instead, the seller added.

One major Russian mill was offering rebar at $410-415/t fob. But many of the CIS mills surveyed by Argus are still not offering rebar on the export market, although this is bound to change soon given the rapid softening of the Russian construction market.

The new focus will be on Europe, some market participants said. Other key markets will include South America and West Africa, one trader added.

One Russian mill has been sending small cargoes of around 4,000 t/week into Europe since the quotas opened on 1 July and plans to ramp this up after Turkey exhausts its quota, Argus understands.

Russia still has a substantial amount of availability in its EU quotas for wire rod and rebar. As of today, 121,712t of rebar remains, with 2,719t awaiting allocation, while 247,289t of wire rod remains, with 4,474t awaiting allocation.

Russian mills have remained relatively disciplined since quotas opened, sending only a few thousand tonnes per week of rebar and billet. But Turkey has almost exhausted its quota, with only 20,671t of rebar and less than 115,000t of wire rod remaining.

Similarly, Ukraine, Belarus and Moldova have around 670,000t of wire rod remaining for the rest of the period. Ukraine and Moldova have about 110,000t of rebar remaining but Belarus is not subject to an individual quota, meaning it can access the 140,000t "other countries" quota when it opens on 1 October and every subsequent quarter.

After Turkey exhausts its quota, it will effectively be locked out of the EU market until the quotas renew in July 2020, giving CIS mills greater opportunity to offer at competitive prices.