dev markets steel review november 2009

8/8/2019 Dev Markets STEEL REVIEW November 2009

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NOVEMBER 2009

ISSN 1759-3352

MEPS (INTERNATIONAL) LTD263 Glossop Road, Sheffield S10 2GZ, EnglandTel: (0114) 275 0570 Fax: (0114) 275 9808E-mail: [email protected] Web Site: http://www.meps.co.uk

Copyright 2009 by MEPS. All rights reservedNo information contained in this report may beused or reproduced in any manner whatsoever without written permission from the publisher.

*Import prices

Photocopying, faxing or forwarding by e-mail to a third party is strictly prohibited without the permission of MEPS (International) Ltd.

COMPARISON OF TRANSACTION PRICES ($US/tonne)

HR Coil HR Plate CR Coil HD Galv W Rod M Sect R Bar M Bar

Russia Low: 533 601 624 896 507 695 500 501

Ukraine Low: 451 445 532 704 508 720 474 488

Turkey Low: 550 600 660 760 450 610 460 480

India Low: 584 637 658 701 548 594 584 552

UAE* Low: 520 545 620 710 490 575 470 515

South Africa Low: 643 767 779 869 703 914 662 739

Brazil Low: 895 - 1127 1329 1040 1098 953 982

Mexico Low: 634 626 672 755 513 672 498 626

D. Markets Avg. Low: 601 603 709 841 595 735 575 610

MONTH on MONTH % CHANGE

Russia Low: 2.1 2.7 1.3 2.5 1.8 1.8 -2.9 2.9

Ukraine Low: -2.4 -10.6 -6.3 -8.0 -2.5 -4.3 -9.0 -2.6

Turkey Low: -1.8 -6.3 -4.3 -7.3 -7.2 0.0 5.7 -1.2

India Low: -2.7 0.0 0.9 1.0 0.9 -11.2 0.9 -0.7UAE Low: -1.9 0.9 2.5 0.7 -1.0 0.0 -1.1 -1.9

South Africa Low: -1.8 -11.7 -1.8 -1.8 -6.6 -1.7 -5.3 -1.7

Brazil Low: 2.3 - 2.4 4.6 2.4 2.3 2.3 2.3

Mexico Low: 2.8 2.8 2.9 2.9 -6.9 2.9 -3.1 2.8

D. Markets Avg. Low: -0.2 -3.6 -0.1 -0.3 -2.1 -2.5 -1.5 0.1

Annual SubscriptionRate 2009:

UK - 1085NON UK - 1100


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Developing MarketsSteel Review

November 2009

Copyright 2009

Copyright 2009 by MEPS. No information contained in this report may be used or reproduced in any manner whatsoever without written permission from the publisher.

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MARKET HIGHLIGHTS

FLAT PRODUCTS

DOWNWARD PRESSURE CONTINUES ON STEEL PRICES IN THE DEVELOPING NATIONS

Purchasing activity remains subdued in the Turkishmarket. Downward pressure has continued to beexerted on negotiated finished steel prices. Marketparticipants are presently trying to maintain manageableinventory levels. In the flat product segment, thepreference for short-term agreements between buyersand sellers persists. This situation is predicted tocontinue until the business environment normalises.

Trading conditions in the UAE remain difficult.Sentiment amongst distributors is low. Nothing hastranspired that suggests purchasing activity will turnthe corner in either December or January. Foreignsuppliers have modified their flat product andconstruction steel offers several times. Only smallquantities of material have been ordered. CIS suppliershave struggled to sell material despite their lower quotations. At present, no one is prepared to carryunnecessary high stocks into the New Year.

Indian flat product steelmakers have downgraded their flat rolled material prices. Producers have linked theserevisions to the downturn in global prices and anappreciation in the Rupee. The actual reduction is not

that significant because less generous discounts arebeing offered. Construction steel prices have beenunder pressure since July/August. The majority of themajors have rolled forward their October values.Producers have been hesitant to lower their quotationsowing to the cost of scrap and semi-finished products.

The business environment in South Africa remainsarduous. ArcelorMittal South Africa (AMSA) haslowered some of its domestic offers for November. Themill has stated it reduced the figures in its localquotations according to international price trends and

the Rand/Dollar exchange rate. Local buyers are notconvinced. The benchmarking favoured by thesteelmaker does not echo market conditions. Theseare the first downward revisions since the producer started to raise its prices in July. Highveld has continuedto follow AMSAs pricing direction, albeit at a final price

which is around 1 to 2 percent lower than its competitor.

Sentiment in the Brazilian market remains mixed. Thespotlight has once again fallen on the pricing policiesof internal steelmakers. Distributors have raised their domestic offers after their purchasing discounts weremoderated. The price rise has drawn criticism fromusers. Producers have also started to contact their flatproduct customers over a possible December price rise.Higher raw material costs and a stronger Real are beingheld responsible. Rising scrap and billet values haveraised concerns that long product quotations may edgehigher.

A few segments of the Mexican steel market are startingto show positive signs. Negotiated prices have beenunder less pressure in November. In general, end-usersremain content with purchasing small lots of material.This trend will more than likely continue in December and January.

Russian steelmakers surprised the market with their conservative November offers. Observers hadpredicted more substantial cuts. Export quotations have

been adjusted to reflect the general health of globalmarkets. Last months coking coal shortage has beenblamed on the Sayano-Shushenskaya hydro-electricpower station accident. Russian coal companies raisedtheir deliveries to local power plants to prevent power shortages.

In the Ukraine, effective construction steel values havestarted to exhibit signs of weakness. Pressure is beingexerted by price competition amongst distributors andproducers, as well as the onset of weaker seasonaldemand. Domestic flat product offers are more or less

untouched. The Ministry of Economy has started toexamine the pricing strategies of the local steelmakers.Attention is being paid to the disparity betweendomestic and export prices. In recent months, localquotations have started to edge higher whilst globalprices have fallen.

HOT ROLLED COIL

Distributors and end-users in Turkey have been quietin November. The majority have retained a cautiousprocurement strategy citing price volatility. Active buyers

are smaller in number. No one believes that a bottomhas been reached yet. As a result, short-term

purchasing agreements have increased in popularity.In the meanwhile, the price differential betweendomestic and imported hot rolled material has closed


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FLAT ROLLED PRODUCTS TRANSACTION PRICES - UAE* ($US/tonne)

MAY JUN JUL AUG SEP OCT NOV

Hot-rolled Coils 365 435 490 535 535 530 520

Hot-rolled Plates 460 485 550 575 575 540 545

Cold-rolled Coils 445 460 560 605 605 605 620

H.D. Galv Coils 547 630 670 715 740 705 710

Based onlow values

2009

INDIA FLAT PRODUCTSTransaction Prices, Rs/tonne

20000

25000

30000

35000

40000

45000

50000

11/07 3/08 7/08 11/08 3/09 7/09 11/09

HR Coil HR Plate

CR Coil HD Galvanised

compared to October. A large number of local tradersare selling material below Erdemirs ex-works basisprice of $US620 per tonne.

Purchasing activity has yet to pick up in the UAE. Local

end-users are still reluctant to acquire hot rolledmaterial. The main reason behind the low trade figuresis price volatility. Chinese suppliers have broughttransaction values down by over $US60/70 per tonnein recent months.

Brazilian ex-works basis prices have not dramaticallychanged. This harmony is forecast to end in December.Usiminas is expected to adjust its domestic quotationsupwards by around 4 percent. Local producers are alsoreluctant to sell coil to overseas markets. Internationalprices remain unattractive. Additionally, their

competitiveness is hindered by higher raw materialcosts and the strength of the Real. In earlyNovember, supplies from Asia were being offered tolocal customers at $US510/520 per tonne CFR Santos.

Domestic prices have stabilised in the RussianFederation. Consumption has improved across thecountry. Producers are becoming less reliant onprojects linked to the Central Asia-China gas pipeline.Export quotations have also been moderated inNovember. NLMK has offered material to Turkey, Iran,Egypt and Morocco at $US480 per tonne, FOB Black

Sea, which is $US20/30 lower than the previous bidlevel. MMK has reduced its rates by $US25/65 per tonne. Traders are already predicting further priceadjustments before the end of 2009.

Traditionally, November and December are weaktrading months in the Ukraine. Nonetheless, localproducers Ilyich and Zaporizhstal have opted to leavetheir offers unchanged. The market had expected thevalue of domestic coil to decline. Russian suppliersare selling material at $US530/550 per tonne DAF.

Purchasing activity in the South African market remainsanaemic. End-user sentiment has not advanced.Buyers have once again been left disappointed. Localsellers have continued to ignore their pleas for lower domestic coil quotations. Last month, AMSA raised itscommercial grade hot rolled material ex-works offers

by 4 percent.

The Mexican market may have turned a corner. Buyershave started to acquire material from their suppliers.Distributors are unsure how sustainable this trend willbe. Thus far, local ex-works prices have remainedunchanged in November. A few end-users fear that themills will raise their quotations next month.

The Indian steel majors have reduced their November basis prices. SAIL initiated the revision when it reduced


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FLAT-ROLLED PRODUCTS - TRANSACTION PRICES

price/tonne Russia Ukraine Turkey India UAE* S Africa Brazil Mexico(RUB) (UAH) ($US) (Rs) ($US) (R) (R$) (Mex$)

Hot Rolled Coil High: 16140 3840 580 29100 540 5230 1900 9000Low: 15560 3652 550 27500 520 4981 1550 8400

Hot Rolled Plate High: 19000 3880 620 33200 565 6264 - 9000Low: 17550 3606 600 30000 545 5937 - 8300

Cold Rolled Coil High: 20000 4400 680 32500 650 6180 2200 9500Low: 18200 4314 660 31000 620 6029 1950 8900

Hot Dipped High: 27175 5818 780 35500 730 6875 2400 10800Galvanised Coil Low: 26140 5704 760 33000 710 6727 2300 10000

PRODUCT DEFINITIONS

Hot-Rolled Wide Coil - 2-3mm thickness, width over 1.1 metres.

Hot-Rolled Plates - 15-40mm thickness, width over 2.0 metres.

Cold-Rolled Coils - 1mm thickness, width over 1.3 metres. - except India 0.8mm thickness.

Hot Dipped Galvanised Coils - 1mm thickness, width over 1.1 metres, coating thickness 275 gm/m2

. - except India: 0.63-0.8mm, Russia 1.0-1.4mm and Ukraine: 1.0-1.5mm thickness.


Hot Rolled Coil Low: -0.7 0.0 -1.8 -3.5 -1.9 0.0 0.0 0.0

Hot Rolled Plate Low: 0.0 -8.4 -6.3 -0.8 0.9 -10.1 - 0.0

Cold Rolled Coil Low: -1.6 -3.9 -4.3 0.0 2.5 0.0 0.0 0.0

H.D. Galv Coil Low: -0.3 -5.6 -7.3 0.0 0.7 0.0 2.2 0.0

its effective values with a rebate adjustment. Theprivately owned steelmakers Ispat Industries, JSWSteel and Essar Steel followed their lead but with abasis reduction. The producers are hoping that the cutwill curtail the inflow of imported hot rolled material.

Domestic coil values are not expected to fall muchfurther in India owing to rising raw material prices.Particularly attention is being paid to the movement inthe iron ore spot price and the cost of metallurgicalcoal. In early November, imports had fallen below$US500 per tonne CFR as a consequence of low offersfrom Chinese suppliers. Since these were withdrawn,values have edged up to $US505/510 per tonne CFR.

HOT ROLLED PLATE

Purchasing activity in the Turkish market remains low.Machinery manufacturers and shipbuilders have, sofar, been unresponsive to the new lower mill offers.Erdemirs ex-works basis price continues to beunchanged at $US730 per tonne. Low import values

have forced local traders and stockists to trade materialbelow this figure. Quotations from Chinese suppliersare uncompetitive compared to those given by their European and CIS counterparts.

Russian hot rolled plate prices have been under lesspressure in November. Mechel has raised its shipmentsto the Russian building plants of Sevmash, KrasnoyeSormovo, Admiralty Shipyards and Krasnye Barrikady.Evraz's OAO NTMK left its domestic price unchanged.However, it has reduced its basis quotation for customers in Kazakhstan and Central Asia byRUB2,800 to RUB15,500 per tonne DAF.

The Ukrainian market shows no signs of recovery. Thenumber of ships built and contracts signed by Ukrainianshipyards has plummeted dramatically this year. Ilyich

has lowered the basis price for some of its plate gradesby UAH300/400 per tonne this month.

Indian steelmakers have continued to struggle to sellplate to both their domestic and overseas customers.


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CURRENCY EXCHANGE RATESNovember 4 - 2009

Units/US$

Russia (RUB) 29.19

Ukraine (UAH) 8.105

Turkey (TL) 1.489

India (Rs) 47.10

UAE (AED) 3.673

S Africa (R) 7.741

Brazil (R$) 1.731

Mexico (Mex$) 13.25

Eurozone () 0.677

This trend is expected to continue into the first quarter of 2010. In India, the crisis is the product of a smallcustomer base and the availability of low-cost importedmaterial. The differential is around Rs2,000/2,500 per tonne. Expectations are mounting that December offerswill start in the region of Rs29,500 per tonne.

Purchasing activity in the UAE has quietened down alot since Chinese suppliers exited the market.Negotiated values have edged higher by $US10/15 per

tonne. Buyers are waiting to see if CIS and Indiansuppliers will continue to offer favourable bids. Marketconditions have not improved in Brazil or Mexico. Inthe former, imported material has been offered at$US560/580 per tonne CFR FO Brazilian port.

Trading conditions in South African market remaindifficult. AMSA has downgraded its November plateoffer by 5 percent, whilst the other flat product pricesremained unchanged. The correction was expected bythe market. Further reductions have been predicted. If this transpired, small and medium sized merchants

would be forced to devalue their current inventory. Afew firms took delivery of imported material in October.End-users remain convinced that local plate isoverpriced.

COLD ROLLED COIL

The Indian cold rolled market remains buoyed byshipments to the consumer durables and automobilesegments. The quotations from the leading producersare now almost identical. Currently, the majors areprepared to offer hot rolled material to re-rollers on animport-parity basis. Traders are already predicting thatthe steel industry will once again begin to lobby thegovernment for higher import duties. Cold rolled coil

import values have fallen to $US560/570 per tonneCFR.

Ukrainian producers have seen no signs of improvement in the domestic market. Zaporizhstal has

offered its November production at $US580 per tonneex-works. The steelmaker is rumoured to have soldmaterial at $US565 per tonne in late October.

Export prices for Russian and Ukrainian cold rolledproducts have fallen in November owing to weakdemand. On a brighter note, there have been lessmarket-destabilising bids from Chinese mills thismonth. NLMK has reduced quotations for Europeancustomers for its December production by $US45 to$US580/620 per tonne FOB Black Sea. MMK is offeringmaterial from $US600 per tonne FOB Black Sea.

Brazilian basis price offers have remained near October levels. Concerns over coil shortages have persisted.Numerous stockists have raised their quotations as aresult. The recent rise in local prices has encourageddomestic end-users to purchase imported cold rolledmaterial. In mid-November, supplies from Asia werebeing offered at $US640/650 per tonne CFR Santos.

Uncertainty has continued to depress domestic pricesin Turkey. Distributors are not expected to acquireanymore material this year. As in the other flat product

segments, long-term trade agreements have fallen inpopularity. End-users prefer to purchase small bundlesof material. Nobody is prepared to carry stock into theNew Year.

HOT DIPPED GALVANISED COIL

Brazilian producers left their galvanised basisquotations unchanged in November. Material sold bywholesalers has risen in value by another R100 per tonne. This adjustment has been blamed on a reductionin the discount rate they receive from producers.

Recently, material from Asia was being offered to localcustomers at $US680/690 per tonne CFR Santos.

Domestic Russian prices have remained stable inNovember. However, Severstal has revealed that it willbe only producing 48,000 of galvanised steel thismonth. This is 13 percent below Octobers level. In theUkraine, the outlook is less ominous. Shipments to theautomotive industry are forecast to rise owing to adecline in automotive dealer inventory levels. Thebanking sector is also starting to provide new loans.

Galvanised prices in the UAE have remainedunpredictable. Recent volatility has scared off buyers.The exit of Chinese suppliers triggered a $US15/20


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LONG PRODUCTS

INDIA LONG PRODUCTSTransaction Prices, Rs/tonne

17500

22500

27500

32500

37500

42500

47500

11/07 3/08 7/08 11/08 3/09 7/09 11/09

Wire Rod Rebar Merchant Bar

per tonne rise in import offers.

In South Africa, AMSA retained its October quotations.End-users had hoped that the steelmaker would havelistened to the market. Calls for a downward revision

are growing. Buying activity is still fairly modest. Lastmonth, the steelmaker controversially pushed aheadwith its pre-announced 3 percent price increase.

In India, the price differential between the major steelmakers has narrowed to Rs2,500. End-users haveused the availability of import material to extract further concessions. Trading conditions in their overseasmarkets have turned arduous in recent weeks. Chinese

suppliers have depressed prices with extremely low-bids. Exporters have been forced to reduce their November offers.

WIRE ROD

Trading conditions in the Indian market remainunchanged. Producers have resisted altering their basisvalues this month. Merchants are unsure how long thispricing strategy will continue. Poor sales have leftinventories at reasonable levels. Buyers are lookingfor lower offers, given the recent softening in scrap andsemi-finished values. State-owned Rashtriya IspatNigam Ltd (RINL) has rolled over its October ex-yardquotation for Mumbai and Chennai.

Sales of wire rod have started to deteriorate in theRussian Federation. The fall is being blamed on weakseasonal demand and the reverberations stemmingfrom last years global financial crisis. Shipments fromthe steelmakers are forecast to fall, month-on-month,by 10 percent in November. Traders have started toreduce offer prices to minimise their stock balance.Evraz's JSC ZSMK domestic basis quote is unchangedat RUB15,850 per tonne. The plant has also restartedselling wire rod to Kazakhstan and Central Asia. Bidsare from RUB14,350 per tonne DAF.

Negotiated prices have fallen in the Ukraine despiterumours of production problems at ArcelorMittal KrivoyRog. The mill failed to deliver material to severalcustomers. The shortfall was made up by wire rod

imported from Moldova. According to preliminaryproduction estimations, the Ukrainian industry will cutwire rod output by 3,000 tonnes to 20,000 tonnes inNovember.

Wire rod values have softened in South Africa. AMSAlowered its basis prices at the start of November. Theadjustment is in the region of 4 percent. Industryobservers expect Highveld to implement a similar priceadjustment. For the past couple of months the Evrazowned subsidiary has shadowed AMSA prices.

Turkish wire rod producers have reduced their domesticoffers by $US20/25 per tonne. These levels may beshort-lived if imported scrap values start to rise

again. Export prices have fallen by similar amounts.Trading conditions in North Africa and the Persian Gulf have become more difficult. Turkish bids to thesemarkets have descended to $US460/470 per tonneFOB.

MEDIUM SECTIONS AND BEAMS

Business conditions have not improved in Turkey.Observers had expected structural prices to mimic thetrend seen in semi-finished product values. So far,producers have resisted moderating their domesticquotations. The differential between I and H beamshas continued. In contrast, distributors have chosen toreduce their offers for both products to nearer theproducer's levels. This policy is not expected to last for long. It is seen as a means of achieving controllableinventory levels.

Russian and Ukrainian structural sections steelmakershave seen no improvement in either their domestic or


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LONG PRODUCTS - TRANSACTION PRICES

PRODUCT DEFINITIONS

Wire Rod (Mesh Quality) - 8-12mm diameter.

Medium Sections and Beams - 240mm x 240mm H Beam. - except Turkey: IPE-NPI (220mm-250mm)

Reinforcing Bar (Deformed) - 16-20mm diameter.

Merchant Bar - 50 x 50mm x 6mm equal angle. - except Ukraine: 50 x 50 x 3-5mm and Turkey: 50 x 50 x 5mm

price/tonne Russia Ukraine Turkey India UAE* S Africa Brazil Mexico(RUB) (UAH) ($US) (Rs) ($US) (R) (R$) (Mex$)

Wire Rod High: 15750 4363 460 27300 510 5580 1900 7500Low: 14800 4116 450 25800 490 5444 1800 6800

Med. Sections High: 24200 5950 625 31000 620 7237 2000 9300and Beams Low: 20300 5833 610 28000 575 7074 1900 8900

Reinforcing Bar High: 15750 4196 470 28200 490 5384 1750 7300Low: 14600 3840 460 27500 470 5128 1650 6600

Merchant Bar High: 17800 4038 500 27000 545 5831 1800 8800Low: 14620 3959 480 26000 515 5717 1700 8300


Wire Rod Low: -1.0 0.0 -7.2 0.0 -1.0 -4.9 0.0 -9.3

Sect. & Beams Low: -1.0 -1.8 0.0 -11.9 0.0 0.0 0.0 0.0

Rebar Low: -5.5 -6.7 5.7 0.0 -1.1 -3.5 0.0 -5.7

Merchant Bar Low: 0.0 0.0 -1.2 -1.6 -1.9 0.0 0.0 0.0

overseas markets. In Russia, Evraz's OAO NTMK basisprice remains unchanged. Discounts are still availablefor material acquired on pre-payment terms. However,the steelmaker has reduced its basis quotation for customers in Kazakhstan and Central Asia by

RUB1,750 to RUB17,350 per tonne DAF.With seasonal demand set to take effect, Ukrainiansuppliers have started to lower their export prices.Structural material has been made available to their overseas customers from $US475 per tonne FOB BlackSea.

In South Africa, Highveld gave the market an insightinto its forecasts for early 2010. In mid-November, thesteelmaker conducted a special sale for structuralsteel, plate and coil for delivery in December/January.

Buyers were offered an additional 5 to 6 percentdiscount. Merchants are reporting that trade is presentlyat extremely low levels. A few have suggested theauction was an attempt to fill December productioncapacity only.

REINFORCING BAR

Purchasing activity is stable in Abu Dhabi but subduedin Dubai. Domestic producers are anxious about thedirection transaction values are heading. Buyers are

tracking Turkish export prices. Until recently these werein free fall. The recent rise in scrap values has worsenedbuyer anxieties. Local rebar is being traded belowAED1,850 per tonne ex-works. In early November,Dubais steel rebar future prices for January andFebruary fell by $US40 to $US435 per tonne.

The South African market remains subdued. AMSA andCape Town Iron & Steel Works (Pty) Ltd (CISCO)lowered their offers this month by nearly 4 percent.Traders and stockists had not expected any revision inNovember. Last month their calls for lower prices had

gone unheeded.

Octobers price increase has failed to hold in theRussian Federation. Negotiated values have startedto soften towards September levels. This trend is


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LONG PRODUCTS TRANSACTION PRICES - UAE* ($US/tonne)

Based onlow values

MAY JUN JUL AUG SEP OCT NOV

Wire Rod 455 455 480 495 495 495 490

Medium Sections 500 530 570 605 590 575 575

Rebar 455 435 450 475 475 475 470

Merchant Bar 465 495 510 525 535 525 515

2009

forecast to continue into the months of December andJanuary. Novembers decrease has been blamed onweaker seasonal demand, and the start of a price war between the mini-mills and traders. The major producers have responded with lower quotations of

their own and are offering additional incentives. Themost attractive deals are reserved for prepaymenttransactions.

Russian steelmakers have raised their export pricesto North Africa and the Persian Gulf by $US10/15 per tonne. The upward adjustment has surprised traders.Consumption in these markets is still relative weak.Rebar is now available at $US440/445 per tonne FOBBlack Sea. Evraz's JSC ZSMK has also resumedoffering material to Kazakhstan and Central Asia.Quotations start from RUB14,350 per tonne DAF.

Ukrainian steelmakers now find themselves in apredicament. They are yet to witness any signs of recovery in their overseas markets and domesticactivity is already shrinking due to the seasonalreduction in construction work. ArcelorMittal Krivoy Roghas chosen to suspend the production of somedimensions and grades of material.

Not much has changed in Turkey. Consumption of reinforcing bars remains highly dependent onconstruction activity and inventory levels. On the whole,

the majority of producers have left their offersunchanged. A few producers have adjusted their domestic figures to take into account the recent smallrise in 3A scrap values (CIS States). Exporters havewitnessed no improvement in their North African andMiddle Eastern markets. Demand is limited and order quantities are low. Ukrainian suppliers have offeredmaterial to their Turkish customers at $US440/450 per tonne FOB Black Sea.

The Indian market has been quiet since late September.

The majors and secondary producers have tried torejuvenate demand this month with price incentives.Distributors are still reluctant to undertake any inventorybuilding.

MERCHANT BAR

Trading activity has remained soft in the Turkish market.This is partly the result of a downturn in constructiondemand. Traders are holding higher than normalinventory levels. Exporters have fared no better. Salesto North Africa and the Persian Gulf have remainedsubdued. Sellers are pessimistic and do not foreseeany December revival. A minority are alreadyforecasting similar conditions in the first quarter of 2010.Export prices are stable in November.

Very little has changed in the Indian market. Tradersand stockists have not seen any noticeableimprovement in demand. Producers have lowered their prices but the wholesale figures remain unmoved.

A similar situation has occurred in the Ukraine. Localsteelmakers have rolled forward their merchant bar offers in November. This move has surprised marketparticipants. Prices traditionally soften in November asseasonal construction activity reduces. Moreimportantly, domestic and overseas markets are quiet.

Local traders are anticipating domestic producers tolower their basis prices soon. The pricing differentialbetween internal and imported material has beeneroded.

Likewise, sales volumes have weakened in the RussianFederation. The majority of the majors rolled over their October merchant bar offers. Evraz's JSC ZSMK wasone of these. However, it has reduced its basisquotation for customers in Kazakhstan and Central Asiaby RUB2,350 to RUB15,950 per tonne DAF.


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BILLET PRICES ($US/tonne)

(1) Domestic (2) Export (3) ImportBillet - 125 x 125mm, 150 x 150mm

Last ThisMonth Month

(1) Egypt (EXW) 460/465 425/430

(1) India (EXW)- Chennai 420/425 450/455- Kolkata 430/435 455/460- Mumbai 420/425 460/465

(1) Pakistan (EXW) 482/487 482/487

(1) S Africa (EXW) 620/630 615/625

(1) Turkey (EXW) 400/420 405/415

(2) CIS (FOB)- Black Sea (CIS) 395/410 380/385- Caspian Sea (Russia) 420/430 382/387- Far East (Russia) 450/455 427/432

(3) UAE port (CFR) ex Turkey/Russia 450/460 420/430

SCRAP PRICES ($US/tonne)

(1) Domestic (2) Export (3) ImportScrap - * HMS 1&2 ** 3A

SCRAP

SEMI-FINISHED PRODUCTS


(1) Egypt (EXW)* 295/300 245/260

(1) Germany (EXW)* - -

(1) India (EXW)*- Chennai 280/285 260/275- Delhi 255/260 250/260- Kolkata 265/270 250/265- Nhava Steva/Mundra port (CIF) 310/315 260/270

(2) CIS (FOB)**- Baltic Sea (Russia) 265/270 245/250- Black Sea (Russia) 270/275 220/225- Black Sea (Ukraine) 265/270 222/227

(3) Turkish port (CFR) ex CIS** 290/295 255/260

(3) USA (CFR)* - -

Domestic Russian 3A scrap prices softened again inNovember. This trend is expected to continue in the

near term. Steelmakers have yet to replenish their winter stocks. This will take place when scrap valuesfall to acceptable levels. Most Ukrainian mills have alsodecreased their scrap purchase price.

Ferrous scrap import values to Turkey started to firmmid-month after falling below $US255 per tonne CFR.Local steelmakers have been reluctant to procure 3Amaterial. Domestic demand for finished productsremains soft. Nevertheless, producers have had toacquire scrap due to low stock levels. Nearly all haveresisted cutting production.

In November, weak demand for finished steel productsin India placed downward pressure on local HMS 1&2scrap values. A recovery is now unlikely to occur in theremainder of 2009. Import scrap offers fell on averageby $US20/30 per tonne.

Effective prices in South East Asia fell to around $US260/270 per tonne CFR (major Asian ports). Suppliersresisted trading material below these levels. Most wereholding out to see if the market price would firm.

Export prices for semi-finished products produced inRussia and Ukraine have continued to fall. Destabilisingbids from Turkish traders have not helped. CISsuppliers had planned to raise their Black Sea portprices but were forced to make a downward adjustmentinstead. There is no sign as yet that the prices havebottomed out. The billet markets in Turkey and thePersian Gulf are still subdued. Purchasers are divided.

On one side are those who believe values will turnupwards. They are opposed by buyers who areconvinced negotiated prices will fall further.

In mid-November, Ukrainian steelmakers Metinvestand ArcelorMittal Kriviy Rih were selling billet in therange of $US385/395 per tonne FOB. These pricesare $US15/20 below Octobers quotation. This month,Russias Mechel has looked to sell billet at $US380/390 per tonne FOB.

Market conditions have remained tough in Turkey.

Domestic quotations for billets and blooms fell tonear $US400 per tonne and $US500 per tonne,respectively, in early November. Values have since


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SLAB PRICES ($US/tonne)

(1) Domestic (2) Export (3) ImportSlab


(1)

Brazil (EXW) 490/530 530/575(1) Pakistan (EXW) 470/480 495/505

(2) CIS (FOB)- Black Sea (CIS) 375/395 365/385- Far East (Russia) 400/430 410/430

(3) Asian port (CFR) ex Brazil 440/460 450/470

BLOOM PRICES ($US/tonne)

(1) Domestic (2) Export (3) ImportBloom - 260 x 260mm


(1) India (EXW)- Chennai 400/405 405/410- Kolkata 425/430 430/435- Mumbai 400/405 410/415

(1) Pakistan (EXW) 480/490 480/490

(1) S Africa (EXW) 747/757 736/746

(1) Turkey (EXW) 510/520 515/525

MARKET AND INDUSTRY ISSUES

risen by US$5/10. Effective prices are expected tocontinue at present levels until demand for steelproducts recovers.

Indian semi-finished product values have increased in-line with higher iron ore spot prices. Billet quotes inSouth East Asia were as low as $US400 per tonneCFR (major Asian ports).

Offers for slab from CIS producers to domestic rerollersremained stable in November. Ukrainian slab deliveriesincreased by 25,000 tonnes in October. Russian sellers

endured a second successive month-on-month fall intheir export volumes. Preliminary figures for November suggest that Russian slab production will slip by 10,000tonnes to 710,000 tonnes.

Far East slab export prices are still under lesspressure than those in the Black Sea region.Russian suppliers have been buoyed by the Chinesemarket. Domestic prices in Mainland China increasedslightly in November towards RMB2950 per tonne($US432). Export offers from Chinese traders haverisen by $US10 per tonne.

NLMK has announced it will increase its production of steel from 12 to 17 million tonnes per year by 2014.The main part of the growth will be achieved throughthe Maxi-Group companies whose productioncapacities will be raised to 4 million tonnes per year.Production of flat products on the main site (NLMK)will grow by 500,000 tonnes. The company intends to

buy coal assets to provide for the expansion.

ArcelorMittal is rumoured to be examining alternativesites for its planned Indian steel facilities. Constructionon its Jharkand and Orissa projects has been delayedby land disputes. The steelmaker has announced thatits Brazilian hot dip galvanised project at Vega do Sulis on scheduled.

Shyam Steel Industries has experienced similar delaysto its Greenfield integrated steel works project in WestBengal. The planned facility will have an annual

capacity of 1.1 million tonnes per year.

Severstal has revealed plans to construct a $US600

million long products plant in Saratov. The facility willhave an annual capacity of one million tonnes.

CSN has announced it is in negotiations with a potentialinvestor about two slab making projects. The facilitiesare located in Congonhas city, Minas Gerais, andItagua, Rio de Janeiro. Previously, the Brazilian

steelmaker was to be the sole owner of these 4.5 milliontonnes per year plants.

POSCO of Korea has broken ground on its new Turkishservice centre in Bursa. The facility will mainly processmaterial for the automotive sector.

NUCOR is still reviewing its plans for a Mexican steelservice centre. The project has no set date. It wasoriginally scheduled to be commissioned in the secondhalf of 2009.

Vale and ArcelorMittal are in discussions to constructa new Brazilian steel plant. The facility will be locatedin the Eastern state of Esprito Santo.


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REGIONAL AVERAGE TRANSACTION PRICES ($US/tonne)

D. MARKETS E.U. ASIAN. AMERICALast This Last This Last This Last This Last This

Month Month Month Month Month Month Month Month Month MonthHR Coils :High 650 652 673 654 700 676 604 582 463 482

:Low 603 601 611 592 615 591 550 543 444 463

HR Plates :High 684 644 718 727 744 704 708 700 429 463:Low 625 603 667 675 674 634 624 619 412 444

CR Coils :High 760 754 782 768 790 750 729 722 558 590:Low 710 709 713 703 703 663 659 655 530 561

HD Galv. :High 886 875 855 838 948 906 820 795 593 623Coils :Low 843 841 787 768 865 822 744 727 568 598

Wire Rod :High 640 627 569 535 660 660 594 588 422 444

:Low 608 595 537 501 580 580 535 532 404 425

M. Sect. :High 787 782 808 778 766 759 681 659 448 457& Beams :Low 743 735 746 715 705 699 645 618 429 438

Rebars :High 614 609 553 511 598 580 586 562 453 475:Low 584 575 516 474 547 528 553 529 434 456

Merc. Bars :High 649 648 673 656 753 748 643 622 431 444:Low 610 610 632 614 713 708 617 594 413 425

The December issue of the MEPS DEVELOPING MARKETS STEEL REVIEW will be dispatched on 22 December, 2009.

The Developing Markets prices are an arithmetic average of the low transaction values identified in the eight countries published in this report -collected in national currencies and converted into US dollars using currency exchange rates effective at the start of each month to provide a basis for comparison. EU average prices are computed from a weighted average (based on consumption) of the low values identified in Germany, France, Italy,UK and Spain. North American average prices are computed from a weighted average of the low prices identified in USA and Canada. Asian averageprices are derived from an arithmetic average of the low transaction values ident ified in Japan, Taiwan, South Korea and China. Individual product priceforecasts are available. Please visit http://www.meps.co.uk/world-price.htm.

The transaction prices in this publication relate to those agreed by steelmakers and service centres for prime material in the specified productsdefined in the relevant tables. The prices are for regular business transactions between customers and their local steel mills, negotiated duringthe current month for delivery in the future. United Arab Emirates is an exception to this rule. *These values are import prices cfr, local port.The transaction prices include all extras for the lowest priced grade of steel in the selected product form - sold ex mill.

Delivery charges and local taxes are not included in the quoted prices. Long term contract deals arranged in the domestic market, or agreementsfor lots of imported steel, are specifically excluded from our price evaluation.

All price and market data is researched by MEPS staff and its local correspondents. High and low values are provided to reflect the range of pricesin the market between major and minor customers. Research is conducted during the early weeks of each month. Changes in the latter part of the month would be incorporated in the next issue.

Please note the transaction references in the different geographic areas:-Russia - Flat Products - Volga regionRussia - Long Products - Volga & North CaucasusUkraine - Long Products - Dnepropetrovsk India - Flat Products - DelhiIndia - Long Products - Mumbai

The data contained in this newsletter has been obtained from respondents who we consider provide accurate intelligence on the steel market.We make our best endeavours to be assured that the information is correct and that our analysis is reliable. MEPS (International) Ltd. cannot

be made liable for any loss resulting from use of our published data, however it may arise.

PRICE DEFINITIONS

CHINA


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dev markets steel review november 2009

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