Prices for ex-Asia slabs have been stable over the past week after the recent gains or have even posted some further increases in some destinations, and the current trend is likely to continue due to limited allocation and the hike in production costs. Major slab buyers globally have not been eager to accept further increases, but even the slower activity has not been putting much pressure on prices in the current conditions.
Most offers for ex-Asia slabs (for both HRC and plate grades), except for the regional Asian market, have been at $510-520/mt FOB, versus $500-520/mt FOB last week. “I would say that nothing below $510/mt FOB can be available from Asia now,” a trader said. The major Indonesian and Vietnamese mills have been offering at $510/mt FOB for July and June shipment, respectively. The offer price for ex-Malaysia slabs has been at $520/mt FOB. But prices above $500/mt FOB have been not fixed in deals in major sales destinations.
In Turkey, HRC prices have reached $620-630/mt ex-works base for June production, while captive slab production costs are evaluated at $540/mt minimum according to the $375/mt scrap average for earlier booked cargoes. Local sources believe that import scrap prices will reach $385-390/mt CFR in the coming round for HMS I/II (80:20), and so captive slab production costs might reach $550/mt. As a result, the current offers for slab from Indonesia and Vietnam at $510/mt FOB come to around $560-565/mt CFR Turkey, while the Malaysian indication at $520-525/mt FOB should equal $570-575/mt CFR. Although there were rumors about an ex-Malaysia deal at $520/mt FOB to Turkey, most market players believe it is too high according to the current market conditions, even for duty-free origin. Russian slab might be an option for Turkish mills due to close proximity and fewer risks compared to Asia. The non-sanctioned slab from Russia is on offer at $540-545/mt CFR, according to some buyers, and mostly it is expected that there will be pressure for some discounts from the Turkish mills’ side.
In Europe, the offer price from major Asian suppliers is still at $560-580/mt CFR, but, after a number of deals at $560/mt CFR or just slightly above, customers have taken a pause. It is not excluded that European mills will accept up to $570-580/mt CFR for plate-grade slabs in the next round of purchases as prices for flats posted another increase last week.
Prices for slabs are lagging behind in the Asian regional market. In the middle of March, a deal for ex-China HRC grade slabs was done to Indonesia at $500/mt CFR, which is $30/mt higher than the tradable level in late February. However, by now, even $500/mt CFR would be hard to achieve, market sources believe. Some Chinese exporters, who have tried to increase their share in the Southeast Asian market after ex-Iran offers disappeared, may give only $520/mt CFR.