After international slab prices increased by approximately $25 to $35 /mt in June, prices have risen approximately $55 /mt further in July, mainly due to the price increases in the international and US flat rolled markets.
Although slab prices have increased in July, slab demand has not seen any major improvement. Steel mills are getting more orders as the auto plants begin to order steel again, thereby allowing flat rolled producers to raise prices. Re-rollers are also purchasing more slabs. However, demand is still sharply down compared to a year ago. US steel mills are still operating only at about 52 percent capacity. While the output of finished products is increasing slightly, it is not yet clear whether there is enough demand to maintain the current up-tick in flat rolled demand and pricing, especially as most service centers have already filled the holes in their inventories. Therefore, re-rollers may scale back on their slab purchases before long.
Currently, Russian slab suppliers are offering at about $420 to $450 /mt FOB or at an even higher level, while Japanese and Brazilian suppliers are offering slabs at $400 to $410 /mt FOB. Slab suppliers are trying to bring slab prices up again in September and market sources expect that in the third quarter, slab prices will reach their highest level of the year before the upward price momentum slows down in the typically slow fourth quarter.
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 as of of July 21, 2009 was 76,346 mt, representing an increase of 46,272 mt when compared to the figure of 30,074 mt in June. The main slab exporters to the US during July were: Mexico, at 40,736 mt; and Japan, at 35,610 mt.
However, the total amount of import slabs arriving in the US during the second quarter of 2009 was 109,759 mt, reflecting a significant decrease of 1,597,792 mt when compared to the figure of 1,707,551 mt in the corresponding period of 2008. The largest quantities of import slabs arriving in the US during the second quarter of 2009 came from Japan, at 34,767 mt; Brazil, at 30,001 mt; Mexico, at 26,932 mt; and Canada, at 17,725 mt. Other smaller slab sources during this period included China and Italy.