Although scrap prices in the US rose by approximately $50/long ton this month, the price trend has not yet affected US domestic billet prices. Within the next month, billet producers will likely try to absorb at least $40/mt of the increase, but sources say that acceptance of such high prices in the world market will not be easy. Currently, US billet prices destined for export are still ranging from $540-$550/mt FOB mill, but with foreign competition such as Russia staying firm at $560-$570/mt FOB mill, global billet buyers won't be so inclined to turn to the US if prices follow scrap.
In response to a perceived drop in demand for US billet in the near-term, US billet producers might take the opportunity to enact holiday-related shutdowns near the end of Q4 to tighten supply. Already, purchasing activity is relatively quiet, and sources don't expect a run-up in demand before the end of the year. In fact, the only factor seemingly working in US billet producers' favor is an uptrend in billet prices in Asia, which will at least narrow the field of competition.