With Ramadan knocking on the door the market is poised for inactivity. The European holidays has stupefied the proceedings further. The long wait for a possible turn of fortune will be extended by another month.
It would be interesting to delve into the intricacies of market dynamics during the intervening period. Since the market has been struggling for normalcy in H1 even a small flicker of hope becomes a spectrum of hope.
Billet market has been relatively resilient for the past 1 month maintaining levels of USD 650 per tonne to USD 680 per tonne FOB Black Sea and USD 660 per tonne to USD 700 per tonne FOB Turkish port. Typically billet market is the triggering point for any revival in steel market.
MENA nations after a grueling phase of political crisis heaved respite with buying around end May creating ripples in the semis market. Prices appreciated by nearly USD 50 per tonne within a fortnight rattling the market. However towards the end of June market once again relapsed into a corrective mode with replenishment being short lived in the absence of demand.
Remarkably the correction has been guarded with a vibration in a buffer of USD 20 per tonne to USD 30 per tonne. Multiplicity of factors has been responsible for the buoyancy in semis market.
1. Fervent booking leading to full order books for August.
2. Limited supply
3. Strong demand in Turkish market
4. Strong demand from domestic market in Ukraine and Russia
5. Strong scrap prices
With Ramadan commencing in couple of days the billet offer levels have remained intact at USD 680 per tonne to USD 690 per tonne from Black Sea and USD 690 per tonne to USD 700 per tonne from Turkey. However buyers are bidding at USD 15 per tonne to USD 20 per tonne less.
The situation is piquant but reality as with limited offers despite ensuing holidays correction is expected to me limited.
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