RUSSIA REBAR: Domestic price rebound on influence of export duty
Domestic prices for steel rebar in Russia’s Central Federal District around Moscow narrowed upward by 2,000 roubles ($27) per tonne in the seven days to Monday August 16.
Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, cpt Moscow, Russia, was 66,000 roubles ($900) per tonne including 20% value-added tax on August 16.
This price narrowed upward from 64,000-66,000 roubles per tonne a week earlier, but it was down by 6,000-9,000 roubles per tonne from 72,000-75,000 roubles per tonne a month ago.
The assessment was based on deals, offers and market participants’ indications of achievable prices during the past week.
Taking into account what were considered exaggerated offers from traditional suppliers to the Moscow area, stockists have started to look toward producers such as Evraz, Balakovo and Abinks, which sell predominantly in other parts of Russia.
Over the past week, distributors said that the prices available from non-key suppliers, which represented the lower end of last week’s assessment at 64,000-66,000 roubles per tonne cpt, were not available and that buyers would have to return to their regular suppliers.
Following the example of Novolipetsk Steel (NLMK), Magnitogorsk Iron & Steel Works (MMK) announced its price for rebar at the same level as NLMK, 66,000 roubles per tonne cpt. Producers were then able to convince traders that their prices for the domestic market were reasonable and close to the parity with export prices, taking the export duty into consideration.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), export, fob Black Sea, CIS, was $740-770 per tonne on August 16, down by $10-20 per tonne from $760-780 per tonne a week earlier.
Russia has imposed an export duty on steel products that came into force on August 1. The tax on rebar for the period between August 1 and December 31 this year was set at a base rate of 15% but no lower than $115 per tonne. This was intended to restrict the rise in domestic steel prices.
Achieving parity between export and import prices, and similar prices from key suppliers in the region, was said to have given a strong price signal to distributors.
The price of 66,000 roubles per tonne cpt was welcomed by distributors and was accepted by the market as well.
“Unlike in flat products - where we now have to sell below our purchasing price to eliminate bigger losses later, [because we] expect prices to continue falling - thanks to demand in the construction sector we can make some profit while selling rebar,” one distributor sad.
In the secondary market, rebar prices from large traders were heard on Monday at 69,000-74,500 roubles per tonne compared with 71,000-75,000 roubles per tonne a week earlier.