Moscow steel prices bottom as demand rebounds from COVID-19 slump

After weeks of a buying freeze due to the coronavirus pandemic, the Moscow steel market is recovering, allowing Russian steel producers to seek price hikes, sources said June 19.

The rebound is particularly visible in rebar, which after “two lost months” is seeing buyers coming back to restock, a trader said.

In April-May, when the Moscow area was impacted the most by COVID-19 and construction activity was stopped or restricted, rebar prices fell Ruble 3,500/mt ($50/mt) to Ruble 25,500/mt ($367) CPT Moscow, without VAT, according to S&P Global Platts’ weekly assessment.

But on June 19, Platts put its rebar assessment at Ruble 26,400/mt, up Ruble 900/mt.

“The demand is gradually returning in the domestic rebar market amid phased withdrawal of the self-isolation regime,” a rebar producer said. He cited recent sale prices at Ruble 33,000/mt CPT Moscow, with VAT, or Ruble 26,400/mt, without VAT.

Two buyers confirmed the transaction prices for June contracts at Ruble 33,000/mt ($475/mt), adding that offers for July went up to Ruble 33,500-34,000/mt ($482-$489/mt), CPT Moscow, with VAT.

Compared to rebar, hot-rolled flat products demand was picking up more slowly, explained by high inventories still held by stockholders and end-users. Therefore, the price rebound in the flats market has been modest so far.

On June 19, Platts’ weekly HRC and HR sheet assessments were at Ruble 31,150/mt and Ruble 31,750/mt, CPT Moscow, without VAT, respectively, both up Ruble 150/mt week on week.

The new asking prices for HRC from one Russian producer were pegged at Ruble 38,000-38,500/mt ($547-$554/mt) CPT Moscow, including 20% VAT, a large volume buyer said. He expected sales to close at Ruble 37,500-38,000/mt.

A Moscow-based trader cited the latest HR sheet prices at Ruble 40,500/mt ($582/mt), including VAT. A distributor noted that prices over Ruble 40,000/mt ($575/mt) were not workable yet as this was the level paid by end-users in the retail market.

He expected purchases from Russian mills to close at Ruble 39,500-39,800/mt ($568-$572/mt) CPT Moscow, including VAT. He estimated there was still potential for prices to climb another Ruble 1,000-1,500/mt ($14-$22/mt).

— Wojtek Laskowski