US semis market – Import slabs and billets start to soften

As the import market for finished products cools down in the US, the pricing trend for import semi-finished products is about to go down as well. Slab import prices in the US are about the highest in the world, compared with Asian and European countries, but some major slab buyers in the US say that this situation is changing. The slab market has started to loosen up, with prices slowly coming down from their peak levels. Buyers predict that slab prices will continue to trend down in the third and fourth quarters. Flat rolled prices have been softening worldwide, and this will put further pressure on slab prices. Even though the slab availability is improving, slabs have been generally difficult to source, due to the limited number of exporters and tight availability worldwide. However, once only a small player in slab exports, China is now extending competitive offers and decent quantities. In addition to increasing volumes from China, a major slab exporter in Brazil, CSN's blast furnace is back in operation, and this will help to ease the tightness in the market. The current market price for slabs originating from Brazil and Russia is approximately $540 /mt to $550 /mt CFR FO US Gulf and West Coast ports, however, Chinese offers have started to trickle in at below $500 /mt CFR FO. On the billet side, worldwide prices have also come under pressure and softened in the last month, along with finished long product imports. However, the price slippage is not occurring uniformly from all market players. Further decrease in scrap prices will greatly increase chances of another price decrease for billets before the third quarter is over. Again, China is leading the low-priced offers for billets. Current billet prices from China range from approximately $420 /mt to $430 /mt CFR US Gulf ports. Billets originating from Brazil, Turkey, and CIS countries are being offered at higher prices, up to $20 /mt to $40 /mt higher. US government import statistics show that in the four-month period from April 2006 to July 2006, the countries from which the US imported the most low carbon billets (less than 0.25 percent carbon) from were: Canada, at 78,519 mt; Russia, at 70,620 mt; and Brazil, at 42,692 mt. The countries from which the US imported the most low carbon slabs from April to July were: Ukraine, at 599,932 mt; Mexico, at 457,727 mt; and Russia, at 426,244 mt. The countries from which the US imported the most high carbon billets, slabs, and circulars from April to July were: Canada, at 19,230 mt; Brazil, at 10,010 mt; and Mexico, at 3,976 mt.