US billet prices likely to go up along with scrap in July

With the recent price increase for US shredded scrap, US billet prices are expected to go up in July as well.

Although billet demand in the US has stayed, more or less, the same from a month ago amid the continued stagnation of the US longs markets, it is expected that billet prices will follow the US shredded scrap pricing trend and rise by approximately $60/mt to the level of $395 to $405 /nt ($435 to $446 /mt).

The recent US scrap price increase may also push finished product prices up slightly, though overall demand for US long products market is still weak, so it is uncertain whether the markets will accept any price increases. Furthermore, re-rollers may adjust their billet prices downward again if they don’t see any improvement in the finished product markets.

Internationally, billet prices are strong, due to the continued raw and semi-finished materials demand from Egypt and other Middle Eastern countries, in combination with the reduced billet output from the CIS producers. Last week, Turkish billet exports were offered in the price range of $420 to $430 /mt FOB on actual weight basis for July/August shipments, while billet export offers from the CIS were at $400 to $410/mt FOB. Although slight softening was seen last week, prices have registered an increase of about $20 to $25 /mt when compared to a month ago.

The total amount of billet imports into the US in June 2009 was 9,062 mt, representing an increase of 5,734 mt from May. The main country that exported billet to the US during June was Mexico, at 8,861 mt. United Kingdom, United Arab Emirates and India also exported some tonnages of billets to the US during the month.

On the export side, the latest data from the United States International Trade Commission (USITC) show that the total amount of US carbon billet tonnage exported in May 2009 was 5,177 mt, which represents an increase of 2,248 mt from April. However, this figure reflects a significant decrease of 17,560 mt when compared to the figure of 22,737 mt in May 2008.

The main US carbon billet export destinations in May 2009 were: Ecuador, at 1,668 mt; and Brazil, Dominican Republic and Vietnam, with 1,000 mt each. Other countries that received smaller tonnages of US carbon billet during the period include Canada, Mexico, Egypt and Bermuda.