With the estimated $20/mt increase in US shredded scrap prices this month, US billet prices may follow the upward trend and increase slightly in September.
Currently, the US billet market is trending sideways with producers maintaining decent supply levels. In the last couple weeks, domestic billet prices have remained in the approximate range of $395 to $405 /nt ($435 to $446 /mt) delivered to customer. But as billet prices just about always follow the domestic shredded scrap pricing trend, which could be up as much as $20/mt, billet prices may follow suit and go up slightly
On the other hand, domestic finished products demand is still weak and international billet demand is softening. Furthermore, Nucor Bar Mill Group surprised the US longs market this week by announcing a $40/nt ($44/mt or $2.00 cwt.) decrease to its merchant bar and structural prices. The weakening of the longs markets both domestic and to some extent, internationally, could easily negate the upward price pressure from scrap. If billet suppliers do ask for a higher price this month, US-rollers may abstain from purchasing for the time being or risk seeing their profit margins narrow further.
Meanwhile, the international billet market has softened in the last two weeks. Billet purchasing activities have been slowing down in Turkey and the Middle East due to the month-long Ramadan holiday and perhaps a bit of the usual summer doldrums. Billet prices in China have also been declining due to its weakening domestic steel market. Still, international billet prices are still too high to be competitive in the US market. Earlier this week, Ukrainian origin billets were being offered to the export markets in a price range of $435 to $445/mt FOB Black Sea ports, on an actual-weight basis.
The total amount of billet imports into the US in August 2009 was 8,992 mt, representing an increase of 2,329 mt from July. The main countries that exported billet to the US during August were Brazil, at 4,872 mt and Mexico, at 3,178 mt. Other countries that also exported billet to the US in a smaller amount during the period were Canada, the United Kingdom and Japan.
On the export side, the latest data from the United States International Trade Commission (USITC) show that the total amount of US carbon billet tonnage exported in June 2009 was 5,757 mt, which represents a small increase of 580 mt from May. However, when comparing this figure to June 2008, it reflects a significant decrease of 38,918 mt.
The main US carbon billet export destinations in June 2009 were: Dominican Republic, at 2,270 mt; Philippines, at 2,121 mt; China, at 620 mt; and Canada, at 328 mt. Other countries that received negligible amounts of US carbon billet during the period include Hong Kong, India, Mexico, Honduras, Indonesia and Colombia.