International slab prices have been increasing since June; however, slab demand has recently been slowing down somewhat, due primarily to the weakening flat rolled market in China.
Flat rolled mills in China, one of the major world slab importers, reduced their slab purchasing activities in August, due to the slowing domestic flat rolled market and high flat rolled inventories. While China had been buying slab aggressively earlier this year, mills in the country have more recently been facing an oversupply situation on slab and coils, which led some mills to export some slab tonnages in August.
International slab suppliers are trying to raise slab prices for September, however, China’s steel market and economy have big impact to the Southeast Asia, and therefore it is it is uncertain if the price increase would be accepted by the market. Still, the overall slab market situation is expected to be pretty stable for the duration of the year compared to the first half of the year, especially as the flat rolled markets in other regions, such as the US and Europe, remain on a rising trend. Slab purchasing is likely to weaken somewhat, though, due to China's exit and the typical fourth quarter slowdown. Re-rollers learned from last year to avoid carrying high slab inventories so that their costs won't carry into 2010.
In the last couple weeks Russian slab suppliers have been offering slab to the export market at about $445 to $475 /mt FOB. This range reflects an increase of about $25 /mt from the end of July.
In the US, slab supply remains somewhat tight. However, several blast furnaces have resumed operation recently, including US Steel’s Hamilton, Ontario works which produces slabs, and it is expected that there will be more slab availability in the first half of 2010.
The latest data from the US Department of Commerce’s Steel Import Monitoring and Analysis (SIMA) system shows that the total amount of slab imports into the US in the month of August was 121,344 mt, representing an increase of 44,998 mt when compared to the figure of 76,346 mt in July. The main slab exports to the US during August are: Brazil, at 57,266 mt; Japan, at 32,405 mt; Russia, at 20,782 mt; and Ukraine, at 10,593 mt. China and Canada also exported some slab to the US during the corresponding period.