Weakness continues in US billet market

Friday, 15 May 2009 20:00:26 (GMT+3)   |  
       

The US billet market does not seem to have registered any significant improvement in demand from a month ago, as supply is abundant and demand remains weak.

Re-rollers continue to abstain from billet purchasing, as the finished product market is still weak. With the mills not operating at full capacity amid the poor finished product demand and unstable economy, re-rollers do not have the confidence to get back into the market. Furthermore, market insiders do not believe the US billet market will turn around this year.

As US shredded scrap prices have increased approximately $45 /long ton in May, and US billet prices usually follow the domestic scrap pricing trend, US billet prices could potentially rise by the same amount as scrap, which would bring billet prices to the level of $375 to $385 /nt ($413 to $424 /mt or $18.75 to $19.25 cwt.) FOB mill. However, it is doubtful that such a price increase would be accepted, given the weak demand for billets.

Internationally, last week, CIS mills were offering 3SP-5SP billets to the export markets in a price range of $370 to $380/mt FOB and Turkish domestic billet is offered at the level of $392 /mt excluding VAT. Despite some improvement in April, international billet prices have been softening in the last couple weeks, due to the weakening of finished product orders in and around the Middle East region and in Turkey's domestic market.

US import data shows that billet import tonnage totals improved slightly in April. The total amount of billet imports into the US in April 2009 was 8,205 mt, which represents an increase of 1,948 mt from March. The US Department of Commerce’s Steel Import Monitor shows that in April the US mainly imported billets from Mexico, at 6,867 mt, and Canada, at 1,237 mt. The United Kingdom also exported some tonnage of billets to the US during the month.

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 March 2009 was 28,940 mt, reflecting an increase of 13,154 mt from February. Morocco was the main US carbon billet export destination that month, importing 26,197 mt from the US. Other countries that received smaller tonnages of US carbon billet during the period include Brazil, Canada, Mexico and Indonesia.

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