Export prices for Russian wheat keep rising ahead of the wheat export tax expected to coming into force on 15 February (and stay in place until end-June). Wheat of 12.5% protein content loading from Black Sea ports for late-January loading is currently trading at around US$ 275/mt FOB, according to consultancies IKAR and Refinitiv, some US$ 13-18/mt higher than late December 2020. As long as demand stays robust, analysts expect to see prices remain buoyant until at least the end of the month.
Prices for Black Sea billet, undergirded by persistently tight scrap supply from Europe and the US, have reached their highest levels in nine years, according to market observers. Despite some new forecasts predicting a modest correction on the way in February-March, billet prices are expected to stay bullish in the medium term. New indications for March shipments are, in fact, higher than December 2020 levels at around US$ 605/mt FOB (amid talk of some levels hitting US$ 620/mt FOB). Analysts note that the last time billet prices started the year higher than where they ended in the year before was 2012 when prices were at around US$ 600/mt FOB. A number of factors have contributed to the rising billet prices, among them China’s considerable import push for semi products (such as billet) since the middle of 2020 and Russia’s plans to limit scrap exports for six months of 2021.
Tightening supply is likely to see prices for European steel, including steel coil, rise in the first quarter of the year. Already, several EU steel mills say they are sold out on steel coil until at least the second quarter of the year. A new EC anti-dumping investigation against Turkish steel products could also influence an increase in demand for EU steel products, analysts say. Current projections have HRC spot prices potentially hitting EUR 700/mt CIF by mid-February.
Russian coal output fell 5.1% in December, according to new data from CDU TEK, compared to the same month the year before, reaching 35.56 Mt for the month even while export deliveries of Russian coal in December rose 20.5% YoY to 16.66 Mt. Total coal production in Russia for all of 2020 was down by 9.2% YoY to 401.37 Mt, although deliveries were still up by 0.9% on the year to 195.09 Mt.
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