Your course leads to danger. Russian long products market: May 12-26

May has come to an end, summer is coming soon. It would seem that we should build now and build! However, many suppliers of steel products for construction purposes point to low demand. Individual housing construction (IHB) shows positive dynamics, but without the construction of new apartment buildings neither steel companies nor steel traders will have enough orders.

In general, not very typical trends are observed in the market. Prices for rebar and shaped rolled products, contrary to traditional seasonal factors, are not growing, but stagnating, and in some regions even decreasing. The actions of the Central Bank to reduce demand through high interest rates finally broke the economic growth. Moreover, the situation may further deteriorate in the coming months. Only significant injections of public or private funds into the real sector will be able to turn the tide, but so far there are no prerequisites for this.

Metallurgical companies are likely to refrain from raising prices for rebar and fittings in June, but new discounts look more likely. However, to prevent oversupply, steelmakers are likely to continue to limit output. And in order to cut costs, they have drastically lowered scrap purchase prices, which have fallen to their lowest level since the end of 2022. This could trigger a new crisis in the industry.

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