Russian flats producers continue to struggle to maintain at least a limited presence in the export markets and, as finding buyers for hot-rolled coil (HRC) is rather challenging nowadays, the mills have increased their slab sales volumes instead. Still, the workable price for Russian origin slab is sharply lower than the general market levels globally, which brings the sales price levels closer to or in some cases even below production costs, sources say.
Recently, several steel slab cargoes have been sold from Russia to various markets and prices are not matching each other even if considered on FOB basis. This again proves that the mills are working with each customer and on each deal individually. In particular, around 30,000 mt of slabs were sold to China at $600-605/mt CFR early last week, while the previous lot was traded at around $615/mt CFR, sources say. This week, the workable prices for slabs in China are definitely expected below the latest deal price. As for alternative origins, ex-India slab was traded to Southeast Asia at $710/mt CFR.
In Turkey, the latest deal for Russian slab was closed earlier this month at $650/mt CFR for around 20,000-30,000 mt. However, nowadays the price is expected to be at least $40/mt lower. “It should be a maximum of $610/mt CFR based on Russian billets and even lower than $600/mt CFR because China doesn’t pay more than $580/mt CFR,” a Turkish producer told SteelOrbis. Brazilian slab was on offer at $810/mt CFR to Turkey last week.
Decent buying activity has been seen in Mexico. One Russian mill sold two slab cargoes at $570/mt FOB. In the meantime, according to sources, Brazil traded one 20,000 mt lot at $820/mt FOB and 50,000 mt at $850/mt FOB, both to Mexico. “In today’s world, the discount for the Russian origin is $250/mt,” a producer commented.
Being forced to sell at low prices due to the risks, Russian mills do not only have their margins squeezed, but for some suppliers the current levels are getting closer or even going below their cost of production. Some Russia-based sources expect in June that local steel production will decline due to falling consumption. “We are now measuring the market not in terms of monthly volumes [to be produced and sold], but from a weekly perspective,” a source said.
As for HRC, the latest confirmed deal was for 30,000 mt to India at $710/mt CFR. However, players admit that the recently introduced export tax in India would mean the workable level for imports will be quite far below $700/mt CFR, specifically for Russian origin. In Turkey, no active negotiations have been reported for HRC, given that the buyers are not ready to enter discussions in the falling market.