US semis: Billets stable, slabs sliding slightly

Monday, 09 July 2007 14:35:52 (GMT+3)   |  
       

The sluggish US finished products market has kept the semis market relatively slow, with billet prices holding steady and slab prices moving downward.

There is good availability of billets on the market, while demand is poor due to the slow long products market. Billet prices have remained stable since our last report on June 1st, with prices still ranging from $485 /mt to $505 /mt ($440 /nt to $458 /nt or $22.00 cwt. to $22.91 cwt.) delivered to rolling mills.

Billet prices are not expected to move much in the next few months. Scrap prices are currently trending sideways, so the raw materials market is not likely to make a big impact on billet prices in the third quarter. The main concern for billet prices in the third quarter is the overall lackluster state of the US economy.

As for imports, the most recent prices for billet offers from Europe and Brazil are in the range of $540 /mt to $550 /mt CFR FO Port of Houston. Since domestic billets are still less expensive than imported billets, the volume is low and imports are only available for specialized grades. 

On the international markets, CIS origin 3SP-5SP billets are offered for export in the price range of $480 /mt to $485 /mt FOB Black Sea for August shipments. Chinese offers remain at a level of around $510 /mt to $515 /mt FOB, due to the 15 percent export tax. However, the international billet markets are very slow, and hardly any interest is developing for these Chinese or CIS origin billets.  

The most recent data from the US Steel Import Monitor show that from April up to June, 2007, the main countries that exported billets to the US were: Brazil with 23,244 mt, Canada with 13,761 mt, Norway with 7,576 mt, Germany with 4,613 mt, and Finland with 2,180 mt. Some other countries that exported billets to the US during this period were Japan, UK, China, Czech Republic and Italy.

The pricing trend for domestic slabs is down due to the weak flat rolled market and the softening long products market. However, since the European steel markets have started to slow down as well, the import slab market is not faring any better than the domestic market, with import slabs currently being offered at about the same range as domestic slabs. Traditionally, domestic slab prices have been higher than import prices, but US steel mills are currently refraining from offering slabs at a higher level than imports, as it would be hard to find any buyers. 

The current market price range for slabs is $490 /mt to $520 /mt FOB at loading ports ($445 /nt to $472 /nt or $22.23 cwt. to $23.59 cwt.) from South America

Despite the slow demand, some market players believe the slab supplies are not plentiful enough to meet demand for the international slab market in the third quarter. Even though the current flat rolled market is weak in the US with no shortage of slabs, some industry insiders have come up with a theory that the delayed projects in Brazil and Russia, and an outage at Evraz in Russia could lead to a supply problem later in the third quarter. However, this situation is expected to change at the end of third quarter, with slab availability increasing from the new caster production startups.

CST Brazil, now under Arcelor Mittal and called AMD, will operate a new caster in July to produce about 2.5 million tons of slabs per year, some of which will be used internally for flat rolled production. There is new slab capacity coming online from Ukraine and Turkey in the third quarter.  As a result of these projects, there will be a growing amount of slab tonnage on the market. With all the additional supply and the slow flat rolled world market for the foreseeable future, the pricing trend for slabs will remain slightly down for the upcoming months. 

The largest quantities of import slabs arriving in the US during the second quarter of 2007 came from Russia with 261,497 mt, Mexico with 242,679 mt, Ukraine with 127,974 mt, Brazil with 167,944 mt, Australia with 97,144 mt, Japan with 72,710 mt, Italy with 66,451 mt, Canada with 59,309 mt, and Netherlands with 42,019 mt. Slab imports to the US during the same period also came from India, Venezuela, UK and China.


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