Since last week, the major South Korean steelmaker POSCO has been in the market offering slabs to the different global outlets due to expected longer repair times for its rolling capacities after the typhoon, than for steelmaking capacities. Deals for sizable lots are expected soon, though in a few major sales destinations South Korean slabs suppliers have faced tough competition and lower bids than initially expected, SteelOrbis has learned.
The major outlets targeted by POSCO and traders offering its slabs are Europe, Turkey and Latin America. Offer levels have been reported at around $520/mt FOB, but from early this week to some customers suppliers may voice lower prices, according to market sources, as there was resistance from buyers last week.
The most promising sales destination seems to be Europe amid the recent plant shutdowns after the hike in energy costs. According to market sources, some traders have been offering ex-South Korea slabs (produced by POSCO) at $590-600/mt CFR southern Europe, though some mills have received higher offers up to $630-650/mt CFR. Though levels of around $580-590/mt CFR are considered to be workable in Europe as other Asian slab suppliers were targeting $660/mt CFR minimum, no fresh deals have been reported so far. As POSCO is not a traditional slab seller, importers are checking the slab size and steel quality first. Also, it is still unclear whether all these offers are for newly produced slabs from POSCO or whether some are also from stocks (which may not be suitable to many customers).
As SteelOrbis reported earlier, POSCO has up to 600,000 mt of slabs at Pohang Works, which could be sold in the spot market or transferred to another POSCO facility. At the same time, on September 13 the company has officially confirmed that it has restarted operations of its blast furnaces No. 3 (on September 10) and Nos. 4 and 2 (on September 12), which will help to restore semis production. The rolling lines will remain halted for the time being as the damage to them has been greater.
Since last week, offers for ex-South Korea slabs have also been coming to Turkey, at $600/mt CFR, but the interest in buying has not been high as lower-priced Russia slabs are still available (latest tradable level for ex-Russia slabs in Turkey is $510-520/mt CFR, up $10-20/mt from the previous deals). Also, falling scrap prices have been an additional factor in this situation.
Another major slab importer, the Americas, has also been in negotiations with POSCO, though no deal has been done yet. The main reason is the same - competition with Russian suppliers and as a result lower bids for South Korean material. Buyers in Brazil would pay $550/mt CFR for South Korean slabs, according to the market sources, which is too low for the supplier. “Bids are very low compared to offers, because Russian material is still there and available,” a trader said. The latest price for ex-Russia slabs in this destination was $510-530/mt CFR.
