Buyers bottom-fishing

On the world market, there was a major surge in orders for Russian and Ukrainian hot-rolled band and cold-rolled coil starting with the July 4th weekend. The HRB export price for the steel mills in these countries – which we designate as Tier III and IV mills – appears to be up by about $30 per tonne – with the Russian price now at about $360 per tonne, FOB the port of export, and the Ukrainian price up to about $330 per tonne on the same basis.

We thought that the Tier I mills’ export price would fall this summer in order to close the abnormally high spread in price versus the Tier III-IV mills. Instead, the price of the low-priced vendors moved up.

The consequences of this development may include the following:

-- World steel sheet export prices may be bottoming.

-- Even should world export prices head down again, a severe decline to “death spiral” levels (i.e., the marginal operating cost of many steel mills) seems to be less likely.

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