US semis prices remain at a high level with limited supply availability.
The US billet market is particularly tight since there is limited billet availability in the market, as mills have reduced billet production over the last few months due to some production problems.
US ex-works billet prices have maintained their level since last month, with current contract prices being at or slightly over $920 /nt ($1,014 /mt or $46.00 cwt). However, since there are some supply disruptions, certain orders are fixed at up to $100 /nt ($110 /mt or $5.00 cwt) higher on the spot market. For next month, billets are expected to maintain their level, even though shredded scrap prices are clearly headed downward.
In the meantime, the weak US dollar continues to facilitate the export market. US billet exports increased sharply in May, whereas US billet imports continue to decrease. The total amount of US carbon billet exported in May was 22,737 mt, which is 13,839 mt more than the figure of 8,898 mt in April 2008. The main export destinations of US billets during the period were: Ecuador, at 9,734 mt; Chile, at 9,636 mt; and Taiwan, at 2,231 mt. Going forward, some mills close to deep sea access are negotiating their next billet deals with some traders.
CIS origin 3SP-5SP billets are currently being offered by CIS producers for export at $1,040 to $1,060/mt FOB Black Sea for September shipments. This price level is approximately $150/mt lower than it was a month ago. Meanwhile, billets from Turkey have also softened but at a higher level. Producers have been offering to the export markets at a price level of $1,250 to $1,270/mt FOB for September shipments.
As for billet imports, the official data show that the US imported 9,064 mt less in July when compared to June. In July (as of July 29, 2008), the US imported 18,952 mt of billet. During the period, the US mainly imported billets from: Canada, at 9,329 mt; Brazil, at 5,464 mt; and Mexico, at 3,922 mt. Japan also exported some billet tonnages to the US during this period.
As for slabs, demand for slabs used in flat rolled production has come down slightly in the last month, reducing the pressure on supplies somewhat, though prices remain high. On the other hand, demand for plate-making slabs is still good, and prices are above those for slabs used in flat rolled applications.
The prices of slab coming from the CIS have decreased slightly when compared to a month ago; current prices for these slab imports stand at approximately $950/mt FOB, while slab prices from Brazil and Mexico are at least $1000/mt FOB. Delivered prices roughly range from $1,050 /mt rising towards $1,100 /mt CFR FO.
Flat rolled mills are pushing for a price increase in September without much acceptance from the market. Also, raw materials have started showing signs of weakness after an almost 10-month upward run. Slabs should still be a hot commodity in the second half of '08; however, the bullish pricing cycle has certainly ended with the market shifting to a slight downward trend.
Total tonnages of import slabs arriving in the US during July (as of July 29, 2008) were 480,660 mt, which is 167,681 mt more than the 312,979 mt imported in June. The largest quantities of import slabs in the July period came from: Ukraine, at 110,256 mt; Brazil, at 108,900 mt; Russia, at 89,755 mt; and Mexico, at 70,684 mt. Other smaller slab sources during this period included Canada, Japan and Australia.