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Svetlana Delamure Editor Metal Expert News / Metal Expert Weekly

Global Billet Market: current state & future outlook. World Steel Semis Market October 6-8, 2008, Istanbul. Svetlana Delamure Editor Metal Expert News / Metal Expert Weekly. Metal Expert in brief:. Reliable source of information on global steel and raw materials markets since 1994

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Svetlana Delamure Editor Metal Expert News / Metal Expert Weekly

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  1. Global Billet Market:current state & future outlook World Steel Semis Market October 6-8, 2008, Istanbul Svetlana Delamure Editor Metal Expert News / Metal Expert Weekly

  2. Metal Expert in brief: • Reliable source of information on global steel and raw materials markets since 1994 • Provider of daily news, weekly reviews, monthly analytical bulletins, quarterly forecasts, special reports and consulting services • Organizer of international steel and raw materials conferences • Offices in Dnipropetrovsk (Ukraine), Moscow (Russia), and Houston (Texas, USA)

  3. Billet market in 2007: export Quite concentrated market. The major 7 exporters held 78% of the market or 27mt in 2007 Export from Ukraine and Russia made about 42% of global supplies last year High rate of spot trade Thus, market exposed to quick changes 100% = 32mt

  4. Billet market in 2007: import MENA countries accounted for about 30% of global billet trade with Iran being the major importer (around 3.62 mt last year) Import to Asian countries formed some 20% of total Italy is the major importer in EU, accounting for 8% of global imports Again, high regional concentration

  5. Billet market in H1 2008: export • Major decreases • China 70,000mtdown from 2.4mt! • Brazil -32% to 950,000mt • Major increases • Japan +55% to 950,000mt • CIS +17% to 9.3mt, inluding Kazakhstan +99% to 0.43mt • Turkey +76% to 1.4mt Overall +3% vs H1 07 despite China cutting export almost to zero

  6. Billet market in H1 2008: import • Middle East • Turkey +35% to 1.43mt • UAE +67% to around 0.5mt • Egypt +43% to 0.7mt • Iran -30% to 1.2mt (due to LC problems) • South East Asia • +14% to 4.5mt, particularly South Korea, Taiwan, Indonesia, Philippines • Europe • Italy and Spain cut import by 29% and 22% to 1.2mt and 0.7mt accordingly +11% mt +14% -10%

  7. Billet market in 2008: Middle East UAE Iran If one compare domestic rebar prices with 1.5 months (app. delivery term) delayed imported billet prices – mill’s workable margins are obvious!

  8. Billet market in 2008: South East Asia South Korea Taiwan If one compare domestic rebar prices with 1.5 months (app. delivery term) delayed imported billet prices – mill’s workable margins are obvious!

  9. Billet prices in 2008: Italy Most of the time domestic billet prices in USD were lower than 1.5 months delayed imported billet prices partly due to EUR/USD rate Besides, buying domestically you have shorter delivery time

  10. Billet prices in H2 2008 Suppositions • Middle East is the major billet importer • and one of the regions with the fastest growth of construction activity, especially in UAE • Sky-rocketing longs prices were driving billet quotations • So, rebar market situation in Middle East influence global market of both rebar and billet

  11. Billet prices in H2 2008 Turkey were ramping up supplies to UAE this year • Turkish mills as well as UAE buyers ‘overestimated’ UAE market • Partly not taking into account increased production in UAE • UAE buyers will start buying rebar only by the end of the year • To increase production in December, UAE re-rollers have to buy billet in late October UAE rebar market structure (AC growth +30%)

  12. Billet prices in H2 2008 • With UAE market overstocked, Turkish mills found themselves in Augustleft with about 600-700,000tpm of ‘spare’ rebar • Rebar price cuts are not helping to sell • Lowered rebar prices affected both billet quotations and raw materials (esp. scrap) quotations, bringing down billet production costs! • With scrap prices to Turkey as low as $300/t c&f and in CIS around $200-230/t delivered, billet could go down as low as $400/t fob!

  13. Billet prices in H2 2008 Behaviour of UAE market could be extrapolated for most of Middle East Thus, Middle Eastern re-rollers will start buying billet in late October Bottom billet prices will depend on scrap quotations available At present scrap prices the minimum for billet is around $400/fob CIS or Turkey At that, local rebar prices still have the room to fall due to both lowered billet and Turkish rebar prices UAE Current prices!

  14. Summary • Global billet market is very volatile both in terms of prices and volumes • After strong growth in H1 08, billet prices are falling at even higher pace in H2 • We expect re-rollers in Middle East to start buying billet in late October • Minimal billet price will be defined by scrap quotations. At current scrap levels $400/t fob for billet is quite possible • Billet market recovery in South East Asia and Europe will be lagging behind Middle East, because of delayed slowdown there, compared to Arab countries • Price recovery will be hindered by high stocks of material in CIS

  15. Products Market & industry news, analysis, statistics, price database • - Raw materials (scrap, pig iron, DRI / HBI, iron ore, coal, coke, ferro-alloys) • Steel Semis (slab, billet, pipe billet) • Finished steel products (flats, longs, pipes) • Freight Regions • Turkey • CIS (Russia, Ukraine, Kazakhstan) • Europe: South Europe (Italy, Spain), Central Europe (Poland, Romania, Czech, Slovakia), Balkans (Bulgaria, Serbia, Albania, Bosnia) • MiddleEast (Iran, UAE, Syria, Saudi Arabia, Jordan) & North Africa (Egypt, Algeria) • India • US • China • SoutheastAsia (Taiwan, Thailand, Vietnam, Philippines, Singapore)

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