US billet prices drop further in April, defying international trend

US billet supply continues to be plentiful, while demand remains weak as re-rollers have yet to return the market.

After US shredded scrap prices decreased by $15 to $20 /long ton at the beginning of the month, US billet prices dropped by about the same amount, and are now offered at the level of $325 to $350 /nt ($358 /mt or $16.25 cwt. to $386 /mt or $17.50 cwt.) delivered to mills.

With the softening long product prices, sluggish end-use market, and the uncertain economy, there does not seem to be any price recovery in sight for US billets. Although longs prices continue to decline, there are hardly any transactions being concluded as demand remains weak. In light of the weak US longs demand, market insiders do not expect things to improve for the domestic billet market this year.

US import data shows that billet imports have been falling since the beginning of the year, reflecting the continued weak demand. The total amount of billet imports into the US in March 2009 was 6,257 mt; which represents a decrease of 3,710 mt from February and a decrease of 3,489 mt from March 2008. The US Department of Commerce’s Steel Import Monitor shows that in March the US mainly imported billets from the nation’s NAFTA trading partners: Mexico, at 3,036 mt and Canada, at 2,525 mt. Japan and United Kingdom also exported some tonnage of billets to the US during the month.

Nevertheless, despite the soft US demand, international billet prices have gone up by approximately $60 /mt from two weeks ago, due to the recent up-tick in the international rebar sales and international scrap prices, particularly in the North Africa and Persian Gulf regions. CIS billet is currently offered at about $350 to $370/mt FOB CIS and Turkish mills are offering billet at $400/mt FOB.

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 February 2009 was 15,786 mt, reflecting an increase of 11,258 mt from January. Ecuador, which did not import any US carbon billet in January, imported 15,091 mt of US carbon billets in February and became the main US carbon billet export destination that month. Other countries that received smaller tonnages of US carbon billet during the period include Canada, Mexico, Indonesia and Turkey.