International slab market continues softening

Due to the sluggish global economy, weakening US flat rolled market and the typical seasonal factors, the international slab market continues to be quiet and slab prices are trending down.

In contrast to the US flat rolled market, China’s flat rolled prices have been rebounding this week, mainly due to the good performance in the futures and stock markets; however, it does not reflect actual demand, which remains low. Thus, it is very possible that the recent upward pricing trend in Chinese flat rolled is unsustainable, and with the outlook for this market being uncertain at best, China’s slab buying activities have slowed to a near-halt.

In the US, flat rolled prices are trending slightly down. Furthermore, most re-rollers have already secured the materials needed to last them through the fourth quarter and wish to avoid carrying high slab inventories and costs into 2010. Therefore, there are not many slab transactions to be seen in the US market at the moment, and the slab market is likely to continue softening as we approach the year’s end.

Currently, international slab suppliers are offering slab in the low $400s/mt FOB port of origin, which is down from about $450/mt FOB one month ago. With HRC demand remaining soft in most global markets, some buyers foresee international slab prices dropping below $400/mt FOB in December or in the first quarter of 2010.

The latest data from the US Department of Commerce’s Steel Import Monitoring and Analysis (SIMA) system shows that the total amount of slab imports into the US in the month of October (as of October 27, 2009) so far as totaled 206,866 mt, representing a small increase of 5,358 mt when compared to September. Countries that exported slab to the US during October include: Canada, at 99,640 mt; Brazil, at 54,076 mt; Mexico, at 39,886 mt; and Russia, at 13,264 mt.