The usual re-rollers of billets in the US, by and large, have stopped buying billets due to weak end-product markets. Despite the continuously declining billet prices from mills, lower prices have not yet translated to more billet purchases.
After US shredded scrap prices registered a decrease of about $25 /long ton at the beginning of the month, US billet prices followed the downward trend. Local billet prices, on average, range from $375 to $385 /nt ($18.75 cwt. or $413 /mt to $19.25 cwt. or $424 /mt) delivered to the customer's yard. SteelOrbis has also heard of some imports offered at approximately $360 /nt ($18.00 cwt. or $397 /mt) loaded truck in Houston, Texas.
The finished product market is not only weak but continues to deteriorate. Declining prices for long products like rebar and wire rod are putting pressure on the US billet market. Furthermore, re-rollers do not have enough confidence to make billet purchases in the current dismal economy and are not expected to return to the market until the finished product market posts a meaningful turnaround.
Internationally, billet prices have also come down from two weeks ago due to the weak demand from the end-use markets. Currently, ex-CIS billet offers are at the level of $295 - $305 /mt FOB and Brazilian billets are selling at $320 - $330 /mt FOB. Local Turkish billets are offered at $335 /mt ex-works excluding VAT. CIS billets have also become competitive; some Turkish long product mills have stopped producing billets and have instead been buying CIS billets to convert into rebar and wire rods.
US import data for billets also showed a declining trend in January, reflecting the weak demand from US re-rollers. The total amount of billet imports into the US in February 2009 was 9,967 mt, which represents a decrease of 4,906 mt from January. Data from the US Department of Commerce's Steel Import Monitor show that in February the US mainly imported billets from: United Kingdom, at 5,280 mt; Brazil, at 2,517 mt; and Canada, at 1,976 mt. Japan also exported some tonnage of billets to the US during the month.
On the export side, however, the latest data from the United States International Trade Commission (USITC) show that the total amount of US carbon billet tonnage exported in January 2009 increased from the prior month, due mostly to an up-tick in tonnage exported to the nation's NAFTA trading partners. January 2009 billet exports from the US totaled 4,528 mt, reflecting an increase of 3,386 mt when compared to the figure of 1,142 mt in December 2008. The main export destinations for US carbon billets during January were: Mexico, at 2,047 mt; and Canada, at 1,369 mt. Other countries that also received US billet exports during the period include Venezuela and Switzerland.