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from manufacturers, considering their April prices irrelevant. In order to somehow minimize pressure on prices, the mills announced a reduction in supply for the domestic market. However, this has hardly affected the mood of market participants. On the other hand, CIS HRC export prices are up 0.8% w/w to $368/t, while domestic EXW HRC prices are flat w/w at $494/t. On the long steel market, billet prices are up 4.4% w/w to $355/t FOB Black Sea. However, it is premature to talk about the formation of a stable trend, as consumer activity is still reduced.
Steel prices flat on domestic market but export prices are down. ​Retail HRC prices in Russia may fall at any moment. Metal Expert reported. In late March-early April, the situation on the retail market for flat products noticeably worsened. Most players indicated a sharp decline in demand of up to 50-80%. The demand situation has especially escalated in recent days – before, market activity was more acceptable. Traders show almost no interest in purchases, believing that plants’ prices may fall at any moment following export prices and demand. Under such conditions, price on the retail market may be reduced at any moment. Last week, retail HRC prices were flat w/w at $483/t, while export FOB Black Sea prices fell by 7.6% w/w to $388/t. Meanwhile, some producers have already begun to reverse price hikes – Severstal revoked its price increase for HRC at the beginning of the third ten days of March under safekeeping agreements with traders.
Separately, on the long steel market, the relative efficiency of domestic rebar sales has significantly increased, despite the devaluation of the ruble. According to Metal Expert estimates, rebar minus the cost of rolling is currently sold $35-40/t higher than export billet. Under ordinary conditions – at the start of construction season in Russia, with relative stability of export prices and stable demand of foreign buyers – such a difference is not beyond the norm. However, given the current risks due to ‘anti-virus’ measures and a shift in the start of the construction season due to quarantines, a further increase in factory rebar prices is unlikely. Meanwhile, CIS billet prices remained under pressure due to low demand and a weakening in purchases from China. As such, CIS billet export offers fell 1% w/w to $330-340/t FOB Black Sea.
9.1.12​ Transport sector news
Facing a decline in cargo volumes, private operators have asked RZD to ease its fees and charges in the face of a growing crisis ​of the rail transport system in Russia. The operators have asked​ ​Russian Railways (RZD)​,​ which is the system’s regulator, for the following concessions: extending its discounts to up to 99% to support coal transportation; and reducing parking fees on public railways, as the number of idled railcars is growing. RZD opposes both ideas. In a letter, RZD CEO Oleg Belozerov wrote that: the cargo shippers might be supported with the same discounts provided by operators themselves, rather than by the monopoly; and a reduction of parking fees would cause an inflow of idled railcars from private railways, where parking is cheaper, to the public network. This would worsen turnover and negatively affect all market participants. RZD currently provides 13% discounts for coal exports through Baltic and South basins, and transit through Kazakhstan. “The railway industry crisis is gaining momentum. The share of idled railcars now is 38% of the total fleet (vs. 25% in January), double that of a year ago. We believe that most of these idled railcars are gondolas, demand for, which has fallen sharply. Gondola lease rates are at RUB1,000/day in
114​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com