China has become the leading slab importer from Russia lately with huge volumes purchased over the past two weeks at discounts. Prices in recently disclosed deals have been lower than in a contract already reported last week and more than $150/mt cheaper than the lowest offers of Asian origin slabs. Due to the sanctions imposed on Russian steel by the Western world due to Russia's war on Ukraine, a lot of the traditional buyers of Russian slabs have decided to suspend imports. But Chinese traders seem to be interested in purchases (for sales inside the country or even for further re-export), but the price they pay has to be much lower than for alternative billets of “clean” origins.
As SteelOrbis reported, around 10 days ago Russia’s Baltic region-based Severstal sold a 30,000 mt lot of slabs to China at $700/mt CFR. The deal was followed by a relatively fresh booking by another Russian mill, Evraz, for around 40,000 mt at a price around $690/mt CFR. Recently, NLMK, which normally exports from the Black Sea region, has sold four slab cargoes again to China at additional discounts - down to $685-690/mt CFR, sources say.
As a result, Chinese traders purchased at least 230,000 mt of slabs from Russia over the past two weeks, despite the financial, operational and reputational risks, most probably being attracted by a significantly lower price compared to alternatives. The lowest available slab price of Asian origin of slab in the market is $850/mt CFR, which means a $160-165/mt gap with the latest ex-Russia bookings. Moreover, talks regarding new deals from Russia will be at even lower price levels, following the recent sharp fall in hot rolled coil prices in China. As of today, local Chinese HRC prices are at RMB 5,020/mt ex-warehouse, which is down $33/mt (RMB 215/mt) over just two days.
