Semis exCIS in Middle Eastern market: current state and future outlook

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Semis ex-CIS in Middle Eastern market current
state and future outlook
SBB Steel Market Middle East April 28-29 2008,
Dubai, UAE
Svetlana Delamure Editor Metal Expert Weekly /
Metal Expert News
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Metal Expert in brief

• Part of Information agency Metal Courier
  established in 1994
• Reliable source of information on global, and CIS
  in particular, steel and raw materials markets
• Provider of daily news, weekly reviews, monthly
  analytical bulletins, quarterly forecasts,
  special reports and consulting services both in
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  (Russia), and Houston (Texas, USA)

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Middle East in the world steel semis trade today

• 6 major importing countries
• Iran, Syria, Saudi Arabia, UAE, Jordan, Oman
• 18 (5.8mt) of billet imported globally
• 3 (0.9mt) of globally traded slabs
• Share of semis ex-CIS supplied to Middle East
  85

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Middle Eastern countries import mainly billets
Share of semis from CIS has been growing
constantly for the last 3 years
Middle East is an important market for CIS
suppliers, consuming 23 of Russian semis 13 of
Ukrainian, and 85 of Kazakh billet and slabs
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Middle East increased semis import significantly
Most countries of the region import square billet
and only two buy slabs
but growth rates are impressing in both cases
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What is behind increased billet consumption?
The major reason is extremely high construction
activity in the region, especially in Iran and
UAE, and other countries are on their way
Middle East domestic rebar prices, /t exw
During 2007 rebar shipments to the region went up
by 2mln tonnes year-on-year, mainly to Iran
1mt UAE 1mt Rerollers demand for imported
billet was estimated at around 7.6mt in 2007 with
account of new capacities launched
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Other factors supporting billet prices
Crude steel production costs, /t
Raw materials costs Absence of Chinese semis due
to high costs and 25 export duty Newly
emerged semis market in South East
Asia Consolidation of CIS semis production
Export price for Chinese billet with production
costs of 600/t is around 890-900/t fob
970-980/t cf Gulf
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Even more factors
Freight rates, /t
Freight rates Logistics problems in the Caspian
and Black Sea ports in winter USD
depreciation Financial restrictions while
working with Iran
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All the factors mentioned resulted in higher
billet prices will the situations persist?
Imported billet prices, /t cf
Some figures for Middle East market Imported
billet prices by 65-75 Average domestic rebar
prices grew 55-70 since May 2007 Freight rates
by 30 in case of Odessa-Dubai route and 133
in Astrakhan-Anzali case
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Billet prices promise to be strong in 2008 due to

• Demand side
• Strong rebar demand and shortage in Middle East
  will maintain high rebar prices which supports
  rerollers demand for billet
• New steel-making facilities to be introduced in
  2008 wont be brought to full capacity within the
  year

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Billet prices promise to be strong in 2008 due to

• Supply side
• Absence of Chinese billet in the market due to
  high production costs and export duty gives
  freedom Turkish and CIS suppliers
• In 2007 Russia and Ukraine decreased billet
  exports by 480,000t and 600,000t respectively
• Russian Yartsevo and Rostov mini-mills will
  launch rolling capacities of 750,000t totally in
  2008, though
• In Ukraine new billet producer emerged
  Electrostal with 300,000tpy capacity
• Turkey will add about 2.9mt of crude steel
  capacity vs 1.9mt rolling capacity, but it will
  partially offset existing billet shortage in
  Turkish market

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• South Europe (Italy, Spain)
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  Jordan)
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