International slab prices on the rise

With the recent price increases in the global and US flat rolled markets, slab prices have followed the upward trend, increasing by approximately $25 to $35 /mt from a month ago; however, slab demand is still relatively weak, despite the up-tick in finished product prices.

As slab supply is somewhat tight, international re-rollers have decided to replenish their inventories, resulting in an improvement in international slab buying activity. However, it is doubtful that the recent flurry of slab purchasing is sustainable, as underlying demand for flat rolled remains weak. In addition, slab availability is expected to increase once slab prices improve as more slab producers will be interested in re-entering the market.

US flat rolled prices have increased in an average of $2.50 cwt. ($50 /nt or $55 /mt) in the past couple weeks, which, along with increases in other flats markets around the world, prompted slab suppliers to go up with their slab prices by approximately $25 to $35 /mt. Currently, major slab suppliers like India and Russia are offering at $355 to $365 /mt FOB loading port. Ex-Russia slab offers to Taiwan are offering at a price range of $385 to $395/mt CFR Taiwan. Market sources expect that slab suppliers may ask for a higher price level in the third quarter. Nevertheless, even if prices increase, slab buyers will likely be wary about buying too much slab this year to avoid repeating the situation of high slab prices against low finished product prices that took place in the third quarter of 2008.

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 in the US in June (as of June 24, 2009) was 9,328 mt, representing an increase of 9,066 mt when compared to May. However, when compared to June 2008, this import number reflects a significant drop of 303,651 mt. Brazil was the main slab exporter to the US during June, with 9,254 mt. Italy and Canada also exported a small amount of slab to the US during the period.