As disclosed late last week, the Russian government has cancelled the export duty for pig iron and some long steel products, effective for the period from June 1 until August 31. As the duty cancellation will be retroactive, the profits of mills will be higher and international customers will wait for a price decline for material for August shipment, SteelOrbis has learned.
The exemption from the export duty which was between four percent and 7 percent depending on the exchange rate will be for pig iron with HS codes 7201 10 190 0, 7201 10 300 0, and 7201 10 900 0; as well as bars and rods, hot rolled, with codes 7213 10 000 0, 7213 91 490 0, and 7227 90 100 0. Recently, the duty was 4.5 percent (for exchange rates of RUB 85-90 to the US dollar). Initially, rumors were for the exemption of rebar, wire rod and pig iron from export duty, with the rumors emerging in late May. “The adjustment is only for bundles and only until August 31 and not many have such an export [item],” a Russian mill told SteelOrbis. Overall, taking into account the previously limited longs exports from Russia due to sanctions, the amended restriction is not expected to change the market situation much. However, exports to such countries as Israel may in theory increase since Turkey is currently absent from this outlet and some buyers there prefer rebar in coils.
“I think that now there will be more offers from pig iron producers, and they will compete with each other. This may lead to lower offer prices,” a market source said, adding that only a decline by $10-20/mt could push volumes in the export markets.
In the first week of July, basic pig iron (BPI) offers from Russia increased to $430-438/mt FOB Black Sea as suppliers were trying to play on the low allocation and the limited quota for Europe. According to market sources, one deal for ex-Russia BPI was done at $460/mt CFR to Italy, translating to near $430/mt FOB, though the seller claimed over $435/mt FOB. It was unclear by the time of publication what volume was sold at this level with the seller claiming 40,000 mt, while a few sources in the European import market said that hardly more than 5,000-10,000 mt was booked at such a high level. In the previous round, deals from the same exporter were at nearly $450/mt CFR or just slightly above. Nevertheless, a section of the market is still resisting higher prices and the news about the exemption from the duty will just add to these sentiments. “If one deal [done a week ago for 30,000 mt] was at $435/mt CFR, we cannot ignore it,” a trading source said.
In other trading destinations, bids have remained low. “I do not see Turkish buyers [only foundries] accepting even $420/mt FOB, and only for small volumes,” one more trading source said.
The SteelOrbis reference price for ex-Russia BPI in the week ending July 5 settled at $410-435/mt FOB with the midpoint at $422.5/mt FOB Black Sea, up by $5/mt over the week.